Airline Stocks Dip Amid Middle East Tensions
(MENAFN) Airline shares have tumbled sharply following the outbreak of hostilities between Israel and Iran last Friday, with mounting unrest in the Middle East sending shockwaves through global financial markets.
The violence has persisted for four consecutive days, highlighted most recently by ballistic missiles breaching Israel’s air defense and striking Tel Aviv.
Since late May, the price of Brent crude oil surged more than 25%, peaking at $76 per barrel before easing slightly to around $73. This spike in oil prices has exerted significant pressure on airline stocks, driven by soaring fuel expenses and fears of disrupted oil supply chains. Fuel costs represent a substantial chunk of airline operational expenses.
Industry analysts caution that while airlines might pass these increased fuel costs onto customers via higher ticket prices, this strategy risks dampening travel demand.
By May’s end, the impact was clear: Air France shares plummeted 15.6%, American Airlines dropped 9.1%, United Airlines fell 5.8%, and Southwest Airlines declined 4.9%.
In response to these pressures, American Airlines pulled its 2025 financial forecast, citing concerns over travel demand amid US President Donald Trump’s tariffs. The airline projected its second-quarter EBITDA to be between $0.5 billion and $1 billion, reflecting the combined strain of tariffs and rising fuel prices on profit margins.
Other carriers also faced declines: Air Canada slid 3.5%, Delta Air Lines lost 2.8%, Lufthansa dropped 1.4%, International Airlines Group fell 1.2%, China Southern Airlines edged down 1%, and Ryanair slipped 0.7%.
Ryanair reported a post-tax profit of 1.92 billion euros (around $2.2 billion) for March 2023-24, but this represented a 16% decline for the March 2024-25 period. The airline also reduced its earlier passenger target from 210 million to 206 million by March 21, 2026, citing delivery delays from aircraft manufacturer Boeing.
Amid the escalating conflict, several airlines including Air France, United Airlines, Delta Air Lines, and Ryanair have suspended all flights to Tel Aviv.
Legal Disclaimer:
EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
