Aviation: Good times around the corner, courtesy Kingfisher :: Kotak Securities PDF link

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Aviation: Good times around the corner, courtesy Kingfisher
` Yields are strong in 4QFY12 versus usual seasonal trends
` Strong trend in yields to continue; Kingfisher unlikely to restore operations
` Industry capacity to grow at low single digit at best; PLFs and yields to
remain strong
` We have a BUY rating on SpiceJet
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily20032012.pdf



Good times around the corner, courtesy Kingfisher.  In light of Kingfisher reducing
capacity, yields (rev per RPKM) in 4QFY12 are exhibiting a strong trend. Average oneweek forward fares in 4QFY12 are at similar levels as 3QFY12, which is the strongest
quarter of the year. As per usual seasonality, fares in 4QFY12 are lower (by ~5-7%)
versus 3QFY12. Strong yields solve one of the problems for the sector—it is poised for a
return to profitability in case of any meaningful (>10%) correction in crude prices.
We reiterate BUY on SpiceJet (TP of Rs45). We have a SELL rating on Jet Airways
(TP Rs280) as we think that cash-flow issues might impair recovery for the airline.