Since Russia’s invasion of Ukraine airline stocks have lost approximately 20% of their value, largely due to spiking fuel prices.
Monday alone United Airlines’ shares lost 12% of their value, Jetblue shares, 11% Spirit shares 11% and Delta shares 10%. These losses come after airline stocks crashed precipitously in the 1Q20 with the arrival of the COVID pandemic.
Jet fuel accounts for approximately 30% of airlines operating costs, leaving them particularly vulnerable to the sharp rise in oil prices from $63 per barrel in August 2021 to around $120 per barrel this Monday.
Adding to airlines’ worries is the fact that air travel still has not recovered from the pandemic with the number of people flying remaining at about 80% of pre-pandemic levels.
Some airlines have oil price hedges allowing them to partially offset price increases, but major US carriers, United Airlines, American Airlines and Delta Airlines have not pursued this strategy.