Falling Oil Puts Airline Sector Up In First Class (UAL, DAL, LCC, LUV)

Here is how some of the major airline carriers are trading today: United Continental Holdings, Inc. (NYSE: UAL) is up 3% at $22.22; Delta Air Lines Inc. (NYSE: DAL) is up 1.1% at $11.08; US Airways Group, Inc. (NYSE: LCC) is up 1.2% at $10.84.

The one exception is Southwest Airlines Co. (NYSE: LUV) with its shares trading down 1.3% at $8.11 because it is a hedge-play.  Southwest is an airline which often is more active in hedging out its oil price exposure, so a drop of more than 5% in oil prices from the peak in oil this week does not necessarily translate t quite as high of savings for Southwest.

What is important to remember here is that a $1.00 drop in crude is supposed to be worth about $400 million in profits to the airline industry.

JON C. OGG