United

Spirit

Delta

<div class="textg" style="text-align: justify; font-weight: lighter; line-height: 1.3em; font-size: 15px; border-radius: 3px; color: #80909a; padding: 10px; background-color: #F4F6F9; margin-bottom: 15px;">
  Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our&nbsp;<a href="https://tokenist.com/terms-of-service/" style="text-decoration:underline;color:#3c7b7b" target="_blank" rel="noopener noreferrer nofollow" class="deco-link">website policy</a>&nbsp;prior to making financial decisions. 
</div> 
<p class="has-drop-cap">At $95 per barrel, Brent crude oil is at an all-time high this year. And just as it accelerated the inflation rate, rising oil prices thwarted recovery plans for airline companies. According to the Bureau of Transportation Statistics (BTS) fuel costs account for 15 – 20% of airline expenses.</p> 
<p>As of March 2023, BTS noted a <a href="https://www.bts.gov/newsroom/us-airlines-january-2023-fuel-cost-gallon-43-december-2022-aviation-fuel-consumption-down" target="_blank" aria-label=" (opens in a new tab)" rel="noopener noreferrer nofollow" class="deco-link">71.7%</a> rise in the cost per gallon of fuel since January 2019. Moreover, because the oil price is so variable, it makes airline stocks volatile and risky investments.&nbsp;</p> 
<p>Since topping in July at $250, the S&amp;P Supercomposite Airlines Industry Index dropped by nearly 24%. The index tracks the performance of the ten largest publicly traded US airlines, from United Airlines and JetBlue to Southwest and Delta Air.&nbsp;</p> 
<div class="wp-block-image"> 
 <figure class="aligncenter size-large"> 
  <img decoding="async" width="1024" height="427" src="https://tokenist.com/wp-content/uploads/2023/09/Screenshot-2023-09-19-184251-1024x427.png" alt="" class="wp-image-172566" srcset="https://tokenist.com/wp-content/uploads/2023/09/Screenshot-2023-09-19-184251-1024x427.png 1024w, https://tokenist.com/wp-content/uploads/2023/09/Screenshot-2023-09-19-184251-300x125.png 300w, https://tokenist.com/wp-content/uploads/2023/09/Screenshot-2023-09-19-184251-768x320.png 768w, https://tokenist.com/wp-content/uploads/2023/09/Screenshot-2023-09-19-184251-650x271.png 650w, https://tokenist.com/wp-content/uploads/2023/09/Screenshot-2023-09-19-184251.png 1438w" sizes="(max-width: 1024px) 100vw, 1024px"> 
  <figcaption class="wp-element-caption"> <em>The inverse relationship between airline stocks (SP500.203020) and oil prices (BZ). Image courtesy of Yahoo Finance.</em> 
  </figcaption> 
 </figure> 
</div> 
<h3 id="airline-profits-revised">Airline Profits Revised</h3> 
<p>Moving into 2024, earnings expectations have now fallen by 10%, according to Bloomberg Intelligence. By the end of 2023, estimates place average airline profits to drop by 8%. This is a complete reversal of prior expectations.</p> 
<p>The Federal Aviation Administration (FAA) noted the highest post-lockdown daily air traffic in May. Combined with an average fuel cost per gallon lowering by 4% in Q2 compared to Q1, this increased optimism until July’s top.&nbsp;</p> 
<p>American Airlines lowered its adjusted earnings per share (EPS) by 23 cents, now falling between 20 – 30 cent range. Per <a aria-label=" (opens in a new tab)" href="https://www.sec.gov/ix?doc=/Archives/edgar/data/0000006201/000000620123000078/aal-20230913.htm" target="_blank" rel="noopener noreferrer nofollow" class="deco-link">SEC filing</a>, the company sharply revised its previous optimism of above 95 cents a share.</p> 
<p>“Fuel prices have increased considerably since the Company’s initial Q3 guidance. The Company now expects to pay an average of between $2.90 and $3.0 per gallon of jet fuel in Q3.”</p> 
<p>Similarly, Spirit Airlines lowered its Q3 revenue forecast last Wednesday, having raised fuel cost estimates from $2.80 to $3.06 per gallon. However, known as a discount airline, Spirit noted “heightened promotional activity with steep discounting for travel booked” as the compounding factor.</p> 
<p>Over the last three months, American Airlines (AAL) plunged by nearly 18%, while Spirit Airlines (SAVE) took a modest hit of 8%. United Airlines is down 15% in the same period.</p> 
<div class="cta-referral"> 
 <img src="https://tokenist.com/wp-content/themes/thetokenist/assets/img/del/cta-referral-1.png" alt="" class="cta-referral__img" loading="lazy" decoding="async"> 
 <div class="cta-referral__text"> 
  <p>Join our&nbsp;<a href="https://t.me/thetokenist" target="_blank" rel="noopener noreferrer nofollow">Telegram group</a>&nbsp;and never miss a breaking digital asset story.</p> 
 </div> 
</div> 
<h3 id="labor-shortage-as-another-headwind">Labor Shortage as Another Headwind</h3> 
<p>In addition to rising fuel costs, airlines must deal with labor shortages. The International Civil Aviation Organization (ICAO) estimated that the aviation industry will need over 350,000 pilots and 480,000 new maintenance technicians by 2026.&nbsp;</p> 
<p>Both lockdowns and mandates resulted in the displacement of 2.3 million jobs since 2019, according to <a aria-label=" (opens in a new tab)" href="https://www.oxfordeconomics.com/resource/financial-time-aerospace-industry-grounded-by-lost-jobs-and-lack-of-staff/" target="_blank" rel="noopener noreferrer nofollow" class="deco-link">Oxford Economics</a>. In the fallout, this great disruption elevated job demand, increasing labor costs.</p> 
<p>This means that <a href="https://tokenist.com/could-tesla-benefit-from-the-uaws-strike/" class="deco-link" rel="noopener noreferrer nofollow">labor un</a><a href="https://tokenist.com/could-tesla-benefit-from-the-uaws-strike/" rel="noopener noreferrer nofollow" class="deco-link">ions</a> have the upper hand. American Airlines had to approve a new contract with the Allied Pilots Association in August, retroactively paying $230 million in wages for the first four months of 2023. The contract also raised wages by 21%, increasing pilot compensation by 46% over the next four years.</p> 
<p><strong><em>Do you think rising oil prices will accelerate the transition into <a href="https://tokenist.com/investing/investing-during-a-recession/" rel="noopener noreferrer nofollow" class="deco-link">recession</a>, as a hard landing for the economy? Let us know in the comments below.</em></strong></p> 
<div class="cta-sub js__cta-sub"> 
 <div class="cta-sub__start" data-step="1"> 
  <div class="cta-sub__title"> <strong>Finance is changing.</strong> 
  </div> 
  <div class="cta-sub__subtitle">
    Learn how, with Five Minute Finance. 
  </div> 
  <div class="cta-sub__excerpt">
    A weekly newsletter that covers the big trends in FinTech and Decentralized Finance. 
  </div> <button type="button" class="btn">Try it out (for free)</button> 
 </div> 
 <div class="cta-sub__form" data-step="2" style="display: none;"> 
  <script type="text/javascript" src="https://app.getresponse.com/view_webform_v2.js?u=QcLhh&amp;webforms_id=hpcwd"></script> 
 </div> 
 <div class="cta-sub__result" data-step="3" style="display: none;"> 
  <div class="cta-sub__title">
    Awesome 
  </div> 
  <div class="cta-sub__caption">
    You’ve subscribed. 
  </div> 
  <div class="cta-sub__greeting">
    You’re well on your way to being in the know. 
  </div> 
 </div> 
</div> 
<p>The post <a rel="noopener noreferrer nofollow" href="https://tokenist.com/the-ten-largest-us-airline-stocks-are-down-24-since-july-as-costs-surge/">The Ten Largest US Airline Stocks are Down 24% Since July as Costs Surge</a> appeared first on <a rel="noopener noreferrer nofollow" href="https://tokenist.com">Tokenist</a>.</p>

The Ten Largest US Airline Stocks are Down 24% Since July as Costs Surge

Table of Contents

Tokenist

Other articles published on Sep 19, 2023

New UK bill to seize stolen crypto reach final approval stage

MINA Crypto Forecast: Will MINAUSD Price Break Below $0.365?

$15 Million Drained From Retool Following Cryptocurrency Hack

Top 3 Underrated Coins Shiba Inu (SHIB), El Hippo (HIPP), and Dogelon Mars (ELON) are Ready to Move

Top 10 Crypto Trading Bots to Help You 2x Your Profits

Shibarium Kian Tumbuh Di Tengah Lesunya Harga SHIB, Ini Artinya

Join our free newsletter for daily crypto updates!