West Texas Intermediate crude broke under $40 for the first time in about six years on Friday. If there is one sector inside of the economy that loves it when fuel and gasoline prices drop, it is transportation. And inside the transportation sector airlines love it the most when fuel drops. What is amazing is that even the major airline stocks were trading lower on Friday along with the broad market selling.
It turns out that what is happening here is that lower fuel prices are making the airlines become competitive on pricing again. With an antitrust or collusion concern in the airline ticket prices, airlines are now likely more conscious about having to lower those ticket prices. That is a thought any way, on the heels of lower ticket prices in the sector.
It has been a concern by many in the public that airlines now have limited competition in many routes due to the number of mergers that have been seen. Also, carriers have lowered their capacity to keep prices higher and to keep their costs in-line as well.
The airlines are still down handily on the day, but they have generally recovered off of lows.
American Airlines Group Inc. (NASDAQ: AAL) was down 3% at $40.75, with a 52-week range of $28.10 to $56.20 and a consensus analyst price target of $55.29.
Delta Air Lines, Inc. (NYSE: DAL) was down 2.6% at $44.53, with a 52-week range of $30.12 to $51.06 and a consensus analyst target of $59.93.
United Continental Holdings, Inc. (NYSE: UAL) was down 1.35 at $55.87, with a 52-week range of $39.46 to $74.52 and a consensus analyst price target of $78.80.
US Global Jets ETF (NYSEMKT: JETS) was down 2.6% at $23.38, against a post-debut range of $21.65 to $25.20.
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