Airline Stocks Become Reverse Proxy For Oil Again
The first week of May, crude moved around just over $50. Today it traded just above $69, a 38% increase over that period. Airline stocks have reacted badly to the news. No wonder, the International Air Transport Association recently said…
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Airlines stocks are on their way to becoming what they were a year ago.
Most major carriers spent the spring and summer of 2008 trading as a reverse proxy for oil prices. United (UAUA), American (AMR), Delta (DAL), and Continental (LCC) all hit multi-year bottoms in July when crude touched $147.
Over the last month, the average stock price of the four companies is off between 15% and 20% while the DJIA has risen 5%.
The airlines stocks are likely to go lower, especially if oil prices press up toward a level of $85, a price target recently released by Goldman Sachs (GS). Last July, AMR dropped to $4.52. It trades at $4.78 today. Oil has moved up almost every day over the last 30 day. The airline stock plunge is probably not over.
Douglas A. McIntyre
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
