Airlines have had rough past few years, and it just might be getting rougher right when things have started to improve. Since the pandemic began, airlines have been first on the chopping block and viciously beat down by the market. Since the vaccines rolled out and travel picked back up – we have seen airline stocks recover. Currently, it seems as if the pandemic days are behind us with vaccination rates consistently rising, infection rates generally decreasing, and at last, restrictions, and mandates being lifted across the U.S.
Unfortunately for airlines, the economics of flying them may be the big new hurdle on the tarmac. Indeed, Airline stocks have been among the hardest-hit industries in the past few weeks as Russia’s invasion threw markets into turmoil. Specifically, the rising price of crude oil and in turn the rising cost of gasoline for vehicles (jet fuel especially), has placed a major strain on the financial sheets of airlines. According to MKM Partners airline analyst Conor Cunningham: “The higher fuel will more than wipe out better revenue near-term resulting in modest reductions to Q1 ‘22 estimates”. With a surge in fuel prices of more than 50%, this year travelers may not come back in droves just as quickly as previously expected, even with Covid-19 cases falling. Despite this rise in fuel prices, the numbers may not reflect in ticket prices so quickly. In fact, according to some experts – It could take months before travelers feel the fuel price in tickets. What do you think about the rising cost of jet fuel due to the conflict? And will an increase in ticket prices be affecting your travel plans?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.