Airline and cruise stocks plunge as oil prices surge on Iran conflict
Investing.com -- United Airlines (NASDAQ:UAL) shares fell 6% on Monday, while American Airlines (NASDAQ:AAL) dropped 5%, Delta Air Lines (NYSE:DAL) declined 4.5%, and Southwest Airlines (NYSE:LUV) slipped 3.8% as companies exposed to high oil prices sold off following a surge in crude prices.
Investing.com -- United Airlines (NASDAQ:UAL) shares fell 6% on Monday, while American Airlines (NASDAQ:AAL) dropped 5%, Delta Air Lines (NYSE:DAL) declined 4.5%, and Southwest Airlines (NYSE:LUV) slipped 3.8% as companies exposed to high oil prices sold off following a surge in crude prices. Oil prices jumped about 20% in early trade on Monday, hitting their highest levels since July 2022, as the expanding U.S.-Israeli war with Iran led some major Middle East oil producers to cut supplies and raised concerns of prolonged disruption to shipping through the Strait of Hormuz. Cruise line operators also fell sharply, with Carnival (NYSE:CCL) down 7%, Royal Caribbean (NYSE:RCL) declining 6.6%, and Norwegian Cruise Line (NYSE:NCLH) dropping 6%.
Deutsche Bank warned on Friday that the price jump represents an "existential threat" for carriers. The firm noted that the industry suffered serious damage when fuel prices surged in 2005, prompting Delta Air Lines and Northwest Airlines to file for bankruptcy. "Absent near-term relief, airlines around the world could be forced to ground" thousands of aircraft as a result of the Iran war, analyst Michael Linenberg wrote in a note. "Some of the industry’s financially weakest carriers could halt operations." Though U.S. airlines are largely insulated from the travel disruptions that have engulfed the Middle East, jet fuel is responsible for as much as 30% of their costs, meaning they have significant indirect exposure to oil price movements.
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