Despite the U.S. State Department issuing a travel alert Sunday following the killing of infamous terrorist Osama Bin Laden, Wall Street analysts expect airline stocks to continue their upward ride Monday.
Airline shares, which have faced strong headwinds thanks to months of rising fuel price that forced carriers to raise fares, started to edge higher in the past month. Analyst Helane Becker of Dahlman Rose Co. expects them to rise further on Monday with oil prices heading downward in the wake of Bin Laden’s death.
“I expect airline stocks to react favorably to oil prices, even with the travel alert,” Becker says. “Overall, I expect oil prices will carry the day.”
And indeed, in early trading Monday, a number of airline stocks were up, including United (UAL) up 4.65% to $23.87; U.S. Airways Group (LCC), up 2.42% to $9.31; American parent AMR (AMR), up 3.59% to $6.08; and Delta Air Lines (DAL), up 3.08% to $10.70.
Becker notes that travel alerts based on concerns about terrorism generally don’t stop Americans from going abroad, unless something happens in the region they were planning to visit. For example, the bombing of a London subway might taper travel to the United Kingdom, but it won’t affect travel to Korea. And since 2001, Becker notes, the U.S. has had a worldwide travel alert out. With the death of Bin Laden, the government increased it to a high alert.
In its most recent worldwide alert, the State Department says:
The travel alert is slated to expire on Aug. 1.
Airfare hikes, however, have a much greater affect on travel and, as a result, airlines stocks, Becker adds.
“Airfares have risen 40% to 100% in the last four months, and Americans have suffered from sticker-price shock,” she says.
Tagged: airfares, airline stocks, AirlineStocks, Al Qaeda, al qaida, american airlines, AMR, Delta Air Lines, DeltaAirLines, jet fuel prices, oil prices, OilPrices, osama bin laden, osama bin laden dead,