Airline Shares Crashed: What You Need to Know        

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Airline stocks are falling fast today, as the rising price of oil has investors fleeing the industry. United Continental (NYSE: UAL  ) , Delta Air Lines (NYSE: DAL  ) , and JetBlue Airways (Nasdaq: JBLU  ) have fallen 10%, while US Airways (NYSE: LCC  ) is down 12%.

So what: Oil is up 3.5% today to a high of $106.48, the highest price we've seen since May 2011. Since oil directly impacts jet fuel prices and therefore variable operating costs, the theory is that earnings will be dinged as a result.

Beyond just impacting costs, there is also concern that high energy prices could put a damper on our economic recovery just as it's getting rolling. If that happens, travel will head down again, hurting the revenue side of the business.

Now what: This is why owning airline stocks is a risky business. There are so many things out of your control, like the price of oil and the macroeconomy, which is a major contributing factor to very volatile earnings.

Buying or selling at this point is really a bet on oil prices, and in turn a bet on how Iran, Syria, and other countries in the Middle East will impact the global flow of oil. Right now there isn't any short-term danger that supply will be disrupted, but if Iran tries to close the Strait of Hormuz or Syria's chaos spreads, all bets are off. This just isn't the time this Fool would attempt to get into airline stocks.

Interested in more info on airline stocks? Add them to your watchlist below.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1784893, ~/Articles/ArticleHandler.aspx, 10/21/2016 6:00:29 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:01 PM
DAL $41.17 Down -0.29 -0.70%
Delta Air Lines CAPS Rating: ***
JBLU $18.57 Down -0.03 -0.16%
JetBlue Airways CAPS Rating: ****
LCC.DL $0.00 Down +0.00 +0.00%
US Airways Group CAPS Rating: *
UAL $55.60 Down -0.97 -1.71%
United Continental… CAPS Rating: **