Airlines Crash to New Lows

Brittney Barrett |

Airline stocks appeared to be making a comeback from their lows in advance of the resolution on the debt ceiling, but results from across the sector proved otherwise today. Airline stocks were hampered by concern surrounding what some analysts are calling a rapid global economic slowdown as well as anticipated seasonal losses for fall.  Even positive second-quarter earnings from United Continental (UAL) and Delta (DAL) did little to bolster shares. Additional cash flow from expired federal airline-ticket taxes also failed to increase enthusiasm; evidenced by a number of the major airlines hitting 52-week lows today.

Southwest Airline Company(LUV) was among, sliding to $9.39 on high volume. Southwest’s weakness is indicative of the fear sweeping the market. The new low comes at a time when analysts actually expect Southwest’s performance to improve. The company will release its earnings on Thursday Wall Street forecasts are coming in around$4.17 billion in revenue for the quarter, a rise of 31.5 percent from the year ago quarter. Analysts are forecasting total revenue of $16.01 billion for the year, a rise of 32.3% from last year’s revenue of $12.1 billion. Shares for the year are down 25.1 percent.

Southwest wasn’t alone in its losses nor did it endure the most severe reversals of the day. AMR Corporation (AMR) also slumped to its annual low today. Shares for the company are down 47.1 percent year- to-date as of Monday’s close.

JetBlue Airways Corporation (JBLU) also sunk to a new 52-week low on Tuesday on lower than average volume down 29.1 percent year-to-date. JetBlue shares were  the second hardest hit of the major airlines, trailing the losses of U.S. Airways (LCC) which fell over seven percent in trading. Shares for the year are lower by well over 40 percent for the year.

For the most part the losses endured today had less to do with the transport industry than the general market pullback. Airline stocks did outpace the fall of the broader market on Tuesday following a report indicating weaker consumer spending in June; however. This is reportedly the worst stock streak since the credit crisis and the fourth week of sharp losses for the major airlines. Airlines have lost over 19 percent since July 7 compared to a 6 percent decline in the benchmark Standard & Poor’s 500 Index.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
BLKB Blackbaud Inc. 63.16 2.52 4.16 313,021
UAL United Continental Holdings 68.26 -1.01 -1.46 3,396,930
DAL Delta Air Lines Inc. 47.82 -0.49 -1.01 9,240,161
LUV Southwest Airlines Company 46.97 -0.84 -1.76 4,734,215
JBLU JetBlue Airways Corporation 20.90 -0.03 -0.14 7,504,324

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