Vacation season is here, and few people could use a break more than U.S. airline investors. But as summer approaches, and with it the typical peak in travel demand, it’s not at all clear they’ll get one.
Concerns ranging from high fuel costs and shrinking margins to a potential price war triggered by capacity expansion have dragged down airline stocks, with some of the biggest carriers posting double-digit declines since the start of the year. Just last week, Delta Air Lines Inc. was the latest to trim its profit outlook, citing a “sharp rise” in jet fuel prices.
On top of all that, the continuing volcanic activity in Hawaii has also hurt the demand for some carriers. The S&P Supercomposite Airlines Industry Index has fallen 10 percent this year, while the broader S&P 500 Index is up about 4 percent.
©2018 Bloomberg L.P.