Airline Stocks Decrease Due to Oil Prices
(MENAFN) Airline equities have experienced a notable drop following the eruption of hostilities between Israel and Iran last Friday, with mounting instability in the Middle East creating pressure on worldwide financial markets.
The confrontation has persisted for four consecutive days, the most recent episode involving "ballistic missiles going through Israel’s air defense systems and landing on Tel Aviv."
The value of Brent crude per barrel has surged by more than 25 percent since late May, reaching a peak of USD76 before stabilizing near USD73.
This escalation in crude oil prices has negatively affected aviation shares, given the resulting increase in fuel expenses and looming risks to oil supply. Fuel comprises a significant fraction of airlines’ total operating expenses.
Market experts indicate that carriers might hike ticket costs in response to the jump in fuel prices, though doing so could also suppress consumer interest.
By the close of May, shares in Air France had fallen by 15.6 percent, American Airlines by 9.1 percent, United Airlines by 5.8 percent, and Southwest Airlines by 4.9 percent.
American Airlines retracted its 2025 outlook due to uncertainty in travel demand, which has been impacted by US President "Donald Trump’s tariffs."
The company provided an EBITDA projection for the second quarter ranging between "$0.5-$1," citing the tariffs and elevated fuel expenses as significant challenges to maintaining profitability.
Stock prices also dipped for Air Canada by 3.5 percent, Delta Air Lines by 2.8 percent, Lufthansa by 1.4 percent, International Airlines Group by 1.2 percent, China Southern Airlines by 1 percent, and Ryanair by 0.7 percent.
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