Are Major Airliners Colluding?
American Airlines Group Inc.CNBC reported that the Justice Department is currently investigating whether or not there is collusion among airlines. The goal of this alleged collusion is to grow the industry at a slower pace as part of an effort…
CNBC reported that the Justice Department is currently investigating whether or not there is collusion among airlines. The goal of this alleged collusion is to grow the industry at a slower pace as part of an effort to keep airfares high.
This was confirmed on Wednesday when Emily Pierce, spokeswoman for the Justice Department, said that the department was investigating potential “unlawful coordination” among some airlines. She declined to comment any further or name any airliner specifically.
As a result of a series of mergers starting in 2008, American Airlines Group Inc. (NASDAQ: AAL), Delta Air Lines, Inc. (NYSE: DAL), Southwest Airlines Co. (NYSE: LUV) and United Continental Holdings, Inc. (NYSE: UAL) now control over 80% of the seats in U.S. skies.
An argument could be made this is one of the most competitive industries in the U.S. and that current price levels for similar routes are transparent. Similar to one gas station across the street from another, the prices are not going to vary that much when each can see what the other is selling for. Is that collusion or is that a natural result of competition?
Shares of United fell over 3% to $51.35 late on Wednesday. The stock has a consensus analyst price target of $76.83 and a 52-week trading range of $36.65 to $74.52.
Shares of American fell nearly 5% to $37.98 in a 52-week trading range of $28.10 to $56.20. The stock has a consensus analyst price target of $56.89.
Delta shares fell over 5% at $38.88 in a 52-week trading range of $30.12 to $51.06. The stock has a consensus analyst price target of $59.57.
Southwest shares were down 4.4% at $31.62 on a 52-week trading range of $25.86 to $47.17. The stock has a consensus analyst price target of $47.61.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
