Aviation: Aviation turbine fuel forms a huge chunk of the operating costs of airlines and, therefore, stronger crude hurts profitability.
In July 2020, Brent crude prices had averaged at $43 per barrel. So far in July this year, prices have averaged at $74 per barrel.
However, passenger load factors aren’t enough to compensate for the jump in costs. InterGlobe Aviation Ltd’s investors, though, aren’t perturbed.
The stock is 15% above pre-covid highs seen in early 2020 despite InterGlobe’s consolidated net worth decreasing to ₹111 crore at the end of FY21 from ₹5,880 crore a year ago.