Airline stocks drops dramatically as oil prices reached a new high for the year of 2009. The Amex Airline index fell 4.8% with all U.S. based airlines down. NYMEX (New York Mercantile Exchange) prices for deliveries of oil for the month of April flew from $3.39 to to $51.53 a barrel. Prices haven’t been seen this high since late November / early December. The price rise for oil has fueled speculation for airline analysts and industry groups, who have updated previous outlooks for the industry.
The Director-General of the IATA said that they will be updating their $2.5 billion loss for airlines in the year of 2009, as premium traffic fell 16.7 percent in January. The update should come out next week.
Remember that post awhile back about the price of oil being a proxy for airline stocks? Unfortunately for carriers, not much has changed. Once the price of oil fell, the demand weakened. However, now airlines may have to deal with rising oil prices and weakened demand for air travel; a double whammy. This will be an interesting year for airlines, but it certainly does not look good on the profit side.
