Fears of Ebola haven't kept travelers at home with high passenger volumes and dropping fuel costs leading to an optimistic outlook for U.S. airlines.
U.S. airline stocks climbed as much as 8.3 percent yesterday, ending a six-day losing streak, as fliers ignored Ebola worries and continued to fill planes. Jet fuel dropped to the lowest price in more than three years.
The Bloomberg U.S. Airlines Index of 11 carriers was up 5.5 percent at 2:37 p.m. in New York, the largest intraday climb since March. Advances were led by American Airlines Group Inc., which jumped as much as 13 percent percent for the biggest one- day gain since it merged with US Airways Group in December 2013.
Investors’ focus may have shifted to the outlook for a possible record third-quarter industry profit and away from the spread of Ebola and a possible global economic slowdown that had weighed on the shares. A group of 11 U.S. carriers should report a $4 billion net profit for the third quarter, according to Michael Linenberg, a Deutsche Bank Securities Inc. analyst.
“There has been a little more concern on Ebola, but so far demand remains strong,” said Savanthi Syth, an analyst with Raymond James Financial Inc., based in St. Petersburg, Florida. “People say, ‘I’m concerned, I’m taking extra precautions, but it’s not going to make me not take my vacation.’”
The airlines rose with broader U.S. stock markets on speculation that the worst three-day selloff since 2011 was overdone. The index of U.S. carriers had fallen 15 percent this month through yesterday.
Prices for fuel in New York harbor fell 2.2 percent to $2.47 a gallon, the lowest price since December 2010. Fuel jockeys with labor as the largest cost for most airlines, and often accounts for about one-third of total spending.
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Photo Credit: An interior cabin of a Boeing 767 showing Vantage business class seats. Delta Air Lines
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