Aviation stocks nosedive as CAPA warns of impending bankruptcy

The advisory body added that a catastrophe could be avoided only if governments came together and coordinated to limit further damage.

Shares of Interglobe Aviation, the operator of IndiGo, tanked over 8 percent, while those of SpiceJet cracked 10 percent intraday after Centre for Asia Pacific Aviation (CAPA) said most airlines around the world may face bankruptcy as early as May-end in the wake of COVID-19.

The advisory body added that a catastrophe could be avoided only if governments come together and coordinate to limit further damage.

"Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full," it added.

And as governments impose travel restrictions, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants, it added.

Both Interglobe Aviation and SpiceJet shares have taken a beating recently as the global economy continues to grapple with the novel coronavirus which has claimed the lives of over 5,800 people.

At 11:59 hrs, SpiceJet was quoting Rs 42.15, down 3.66 percent and Interglobe Aviation was quoting Rs 986.1, down 1.27 percent on NSE.

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