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New Airline Risks: Global Strife & High Oil (LUV, AMR, UAL, DAL, LCC, FAA, RYAAY)

If there is one industry which reacts immediately to higher oil prices and to global unrest, it is the airline sector.  These are technically not new risks but these two issues are hitting the airline carriers hard this Tuesday.  Fewer…

By Jon C. Ogg
Published February 22, 2011, 3:52pm ET · 2 min read

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If there is one industry which reacts immediately to higher oil prices and to global unrest, it is the airline sector.  These are technically not new risks but these two issues are hitting the airline carriers hard this Tuesday.  Fewer people want to fly when tensions are high and the price of oil usually rises faster than what can be passed down to the retail passenger via fuel surcharges. The current economy will lend high profits to the airline sector, but that can disappear or erode quickly if cancellations rise and if fuel prices rise too much.  What was a surprising $7.00 per barrel oil spike is only outweighed by the fact that some might have expected a one-day reaction in airlines to be even worse.

Southwest Airlines Co. (NYSE: LUV) was down 5.5% at $11.88 late in the session on more than double normal trading of over 12.3 million shares.

AMR Corporation (NYSE: AMR) was down over 6% at $6.99 on about 250% of normal volume with over 25 million shares traded.

United Continental Holdings (NYSE: UAL) was down 9.6% at $24.33 on nearly triple volume of 13.3 million shares.

Delta Air Lines Inc. (NYSE: DAL) was down 7.2% on about 250% of normal volume with more than 31.8 million shares late in the day.

US Airways Group, Inc. (NYSE: LCC) was down 6.15% at $9.12 on more than triple volume of over 18 million shares late in the session.

JetBlue Airways Corporation (NASDAQ: JBLU) was down 6.5% at $5.70 on near-double volume with more than 9.1 million shares having traded late in the session.

Guggenheim Airline (NYSE: FAA) was down 5.4% at $37.05 right before the close on about quadruple normal volume of over 83,000 shares.

One standout shocking drop, due to how small of a drop was seen, was Ryanair Holdings plc (NASDAQ: RYAAY) with shares down only 2.3% at $29.51 late in the trading day.  Its volume was not even above 100% at 395,000 with about 20 minutes to close.

JON C. OGG

Contact [email protected] for any questions or corrections.

Jon C. Ogg

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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