US airline stocks gain between 3% and 7% as falling crude prices eased concerns over rising operating costs for carriers.
- American Airlines gained nearly 8%, followed by strong moves in United, Alaska Air and JetBlue.
- Benchmark oil prices dropped to their lowest levels since before the Iran war as supply concerns eased and tanker flows improved.
- While lower fuel costs may support airline earnings, ticket prices reportedly may not decline immediately due to tight capacity and prior bookings.
U.S. airline stocks rose between 3% and 7% on Wednesday after crude prices fell to their lowest level since before the Iran war, easing concerns over cost pressures for carriers.
American Airlines Group Inc. (AAL) led gains with a nearly 8% jump, while Alaska Air Group Inc. (ALK) and United Airlines Holdings Inc. (UAL) climbed around 7% each. JetBlue Airways Corp. (JBLU) advanced about 6%.
Frontier Group Holdings Inc. (ULCC) and Delta Air Lines Inc. (DAL) rose about 4% each, while Southwest Airlines Co. (LUV) gained just over 3%.
Oil Prices Drop As Supply Concerns Ease
On Wednesday, benchmark oil prices fell to their lowest level since before the start of the Iran war as supply concerns eased with more stranded oil tankers exiting the Strait of Hormuz, reported Reuters.
U.S. crude futures moved lower, with both West Texas Intermediate and Brent crude hitting their lowest levels since before the U.S. and Israel launched airstrikes against Iran on Feb. 28, according to CNBC. At the time of writing, West Texas Intermediate was trading at $70.20 per barrel, while Brent was at $73.42 per barrel, according to Koyfin data.
With crude supplies and prices set to ease, airlines stand to save billions of dollars in additional costs as the run-up in jet fuel prices during the Iran war outpaced fare growth. But an immediate decline in fares for flyers remains unlikely amid tight capacity, according to Reuters. Morningstar analyst Nicolas Owens told Reuters that sudden movements in fuel prices can impact near-term airline profitability as carriers have already sold tickets based on previous fuel costs.
AAL, UAL, ALK, JBLU Stocks: What Retail Sentiment Says
On Stocktwits, retail sentiment for both AAL and UAL was ‘bearish’ with ‘high’ message volumes. For ALK retail sentiment was ‘extremely bearish’ with ‘normal’ message volume, while JBLU retail sentiment was ‘bullish’ with ‘high’ message volumes.
AAL stock is up over 13% year-to-date, while UAL stock has gained 14%. ALK shares have risen about 1% so far this year, and JBLU stock has climbed nearly 25% over the same period.
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