▶ Full Post Text
Source: [https://finance.yahoo.com/news/airlines-bear-market-oil-poses-211323893.html](https://finance.yahoo.com/news/airlines-bear-market-oil-poses-211323893.html)
>US airline stocks slipped into a bear market as Wall Street warns that the war in the Middle East threatens to dramatically squeeze profits by driving up fuel costs.
>The S&P Supercomposite Airlines Industry Index closed down 4.1% on Friday afternoon, extending a skid into a sixth day. The group is down over 22% from a multi-year high marked just last month. A decline of 20% or more from a peak is defined as a bear market.
>The sharp decline in shares stems from the Iran conflict, which has caused the prices of jet fuel to surge.
>Analysts worry that prices could stay high for some time as war in the Middle East drags on.
>The price jump represents an “existential threat” for carriers, Deutsche Bank warned on Friday. The industry suffered serious damage when fuel prices surged in 2005, prompting Delta Air Lines Inc. and Northwest Airlines to file for bankruptcy, the firm noted.
>“Absent near-term relief, airlines around the world could be forced to ground” thousands of aircraft as a result of the Iran war, analyst Michael Linenberg wrote in a note. “Some of the industry’s financially weakest carriers could halt operations.”
>Though US airlines are largely insulated from the travel disruptions that have engulfed the Middle East, jet fuel is responsible for as much as 30% of their costs, meaning they have a large indirect exposure.
>Rothschild & Co. Redburn downgraded American Airlines Group Inc. to a hold-equivalent rating this week, with the firm now expecting the carrier to lose money this year. Jefferies has said that each 5% change in the firm’s estimate for fuel prices in 2026 translates to a 5% to 10% impact on Delta’s and United Airlines Holdings Inc.’s earnings per share. For American Airlines, it represents a 35% impact in either direction.
>US carriers will raise ticket prices to help offset fuel costs, according to Bloomberg Intelligence analyst George Ferguson, who thinks the airlines can weather the crisis.
>“I am not saying profits will be good, but they’ll stem losses,” Ferguson said in a message. “And the US market is distanced enough to the Middle East that demand should hold up okay.”
>FedEx Corp. and United Parcel Service Inc., which operate large air-freight networks, also extended declines on Friday. Operators of fuel-hungry cruise ships traded lower.
>Beyond higher fuel costs, travel and transportation companies stand to lose out if the conflict makes consumers too nervous to travel abroad. Then there’s the way higher oil prices could affect the broader economy.
>“Other important considerations include the negative impact of higher fuel prices on the US economy, and more specifically on demand for air travel, particularly among the most price sensitive consumers,” Deutsche Bank’s Linenberg wrote.
https://preview.redd.it/2yyr0ge2emng1.png?width=971&format=png&auto=webp&s=e487726e831db75ae9829584a1f2cc0ec78b89a0
https://preview.redd.it/yrk6aenpemng1.png?width=1018&format=png&auto=webp&s=9d662c86b22ce1060fae521815b9cd9c7c9e998d
https://preview.redd.it/30dse8hqemng1.png?width=1027&format=png&auto=webp&s=7ed6e0914bae45c35bf08fc668042f5228b9e9ff