The high cost of fuel for aircraft and rising gasoline costs for vehicles has the airline industry once again in turmoil and searching for answers, as shares of airlines like United Continental (UAL), Delta Air Lines (DAL), AMR (AMR), JetBlue Airways (JBLU) and US Airways Group (LCC) are plunging.
Other factors for airlines with strong exposure to the Japanese market are also part of the problem, although there was a slowdown before that, although the earthquake has exasperated it.
Consumers and businesses start to take notice when gasoline prices begin to approach $4 a gallon, as they are now, and there is a tightening of spending in response.
Add to that an endless stream of price hikes by the airlines in response to higher costs and you have a situation which is and will continue to devastate the industry.
In March, the International Air Transport Association slashed its full-year profit outlook for the industry to $8.6 billion from $9.1 billion, and boosted its assumption that oil prices for the year will average $96 a barrel.
The lobbying group also said that for every dollar increase in the average price of a barrel of oil annually, airlines face an additional $1.6 billion in fuel costs.
It appears airlines have hit a top in successfully being able to raise prices, an ominous sign for them going forward.
US Airways was trading at $7.86, falling $0.38, or 4.61 percent, as of 2:29 PM EDT. JetBlue Airways was trading at $5.83, dropping $0.29, or 4.74 percent. AMR was at $5.7450, down $0.295, or 4.88 percent. Delta Air Lines was trading at $8.95, declining $0.45, or 4.84 percent. United Continental Holdings was at $19.51, down $1.49, or 7.10 percent.
Friday, April 8, 2011
United (UAL) (DAL) (AMR) (JBLU) (LCC) Plunge on Slow Demand, High Fuel Costs
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