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CNBC EXPLAINS

Airline Stocks Losing Altitude?

Published: Tuesday, 26 Feb 2008 | 8:51 AM ET

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Yolaiki Gonzalez, Market Data Analyst, CNBC

By: Yolaiki Gonzalez
Market Data Analyst

By: Ariel Nelson
Director of Market Data & Content Services

Are airline stocks losing altitude as crude oil futures take off again, moving into the $100 a barrel territory? The AMEX Airline Index [.XAL Loading... () ], an airline sector tracker has dropped more than 24% in the past six months, weighed by a surge in oil but is actually up 3% YTD.

In an almost perfectly inverse move to the AMEX Airline Index, crude oil has increased more than
34% in the past six months due to geopolitical tensions including the recent Turkish invasion into oil-producing northern Iraq and the possibility of OPEC cutting supplies at its March 5th meeting.

All of the Amex Airline Index’s 14 constituents are trading down for the past six months, with the exception of Alaska Air Group [ALK Loading... () ], which is up 12.57%. The worst component has been US Airways [LCC Loading... () ] falling more than half of it’s share price in six months. However, since the New Year, 9 of the 14 stocks are actually up YTD and United is just shy of being positive for the year. Merger talks have helped drive the rebound as synergies from consolidation will help offset increased fuel costs. Continental Airlines [CAL Loading... () ] has surged 33% since January.