Photo: Flickr / j3net
Investors are flocking to airline stocks because of crude’s tumbling price, Jon Najarian, co-founder of TradeMonster.com, said earlier today on Yahoo Finance’s Breakout.Crude is now at $83.03 per barrel after sitting well above $100 earlier in the year,
Delta and United are the two Najarian points out that have performed very well, especially in comparison to Southwest, an airline that is known for hedging against the price of oil. In the third quarter of last year, Southwest posted a loss due to the price of oil falling and their hedge against it.
Because of Southwest’s hedge, the stock has dropped from it’s peak price in early February of $10.04 to it’s current price of $8.83, which represents roughly a 14 per cent drop.
Delta experienced a similar drop in the start of February, but has picked up significantly since mid-March. After sitting at $9.21 on March 16, Delta is up to $10.77 despite a 6.5 per cent drop this morning.
United has experienced a nearly identical performance, dropping in early February but picking up in middle march, from $19.42 to today’s $23.25. Clearly, the difference is the hedged bets that Southwest has on oil compared to the other two airlines.