US airline stocks are witnessing intense selling, after they declined strongly in recent weeks, coinciding with the rise in oil prices and thus fuel prices, which led to a decline in these stocks by more than 20% during the past three months.
In light of this situation, the Australian company Qantas said that it may increase ticket prices in response to the rise in aviation fuel costs.
Officials at Fin Air, the national carrier of Finland, and Barclays Bank, who spoke to the Financial Times, expected that the same would apply to other international companies.
This step comes after oil prices recorded their highest levels this year at $95, and according to IATA, jet fuel exceeded $135 per barrel on September 15 when the price of a barrel of oil reached $94 per barrel, a monthly increase of 9%. But it is still about 2.5% lower on an annual basis and about 20% lower than the peak that the travel sector reached in the summer of 2022.
European airlines have a great advantage over their global competitors, as they have hedged against sharp fluctuations in fuel prices, and have purchased advance contracts that secure 60 to 80% of their expected fuel needs for the last quarter of the year, and between 16 and 45% for 2024, according to Barclays estimates.
Unlike European companies, American airlines are in trouble, as they do not usually hedge, which will add to the pressures they faced this fall, as ticket prices fell in the United States with weak demand, especially for domestic flights, which forced Delta and American Airlines to… last week to lower their third-quarter earnings expectations.
These concerns contributed to intense selling in airline stocks, which declined in recent weeks, in line with the rise in crude oil prices, as the MSCI global airline index fell by 16% over the past three months, while the index that tracks US airlines fell by more than 20 percent. % in the same period.
