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Airline Stocks Bounce Back on Monday's Trading: Here's Why
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Key Takeaways
Major airline stocks rose sharply on June 17 as oil prices fell roughly 2% amid easing Israel-Iran tensions.
The NYSE ARCA Airline index climbed 3.36% after dropping 4.3% on June 13 due to prior geopolitical fears.
Lower fuel costs buoy optimism, though airlines still face delivery delays, labor costs, tough competition.
Players in the Zacks Airline industry have made a notable comeback by performing well on the bourses on Monday, June 17, 2025. Industry heavyweights like Delta Air Lines, Inc. (DAL - Free Report) , United Airlines Holdings, Inc. (UAL - Free Report) ), American Airlines Group Inc. (AAL - Free Report) and Southwest Airlines Co. (LUV - Free Report) soared 5.14%, 6.11%, 5.11% and 1.48%, respectively, from Friday’s closing price. Other airline stocks like Alaska Air Group, Inc. (ALK - Free Report) and JetBlue Airways Corporation (JBLU) have also reported upside, with their shares having gained 2.80% and 2.23%, respectively, from the previous day's closing.
The NYSE ARCA Airline index, which tracks the performance of major airlines, was revised upward, consequently ending Monday’s session at $55.32, up 3.36%, further emphasizing the positive market reaction.
Of the abovementioned stocks, Delta Air Lines, Southwest Airlines, Alaska Air and JetBlue Airways currently carry a Zacks Rank #3 (Hold). While United Airlines carries a Zacks Rank #4 (Sell), American Airlines presently carries a Zacks Rank #5 (Strong Sell).
Given that fuel expenses are a significant input cost for the aviation space, the decline in oil prices bodes well for the bottom-line growth of airline industry participants. To this end, crude oil futures were down about 2% on Monday following the easing of tensions between Israel and Iran. This has led to the northward movement of airline stocks.
Currently, Iran is seeking to de-escalate the situation and negotiate a ceasefire with Israel and halt further military action. Such diplomatic moves by Iran have led to a reduction in market fears of global oil supply disruptions, thereby gaining investors’ confidence. The oil market calming down is a major relief to industries like airlines, which are heavily dependent on oil.
The upside performance of airline stocks is being considered as a recovery because it came just after a significant downturn on Friday, June 13, 2025, when tensions in the Middle East (a critical region for global oil supply) escalated at their peak, and oil prices surged 7%. The NYSE ARCA Airline index had also dipped 4.3%. At that point, many airline stocks had dropped as investors feared the long-term impact of higher fuel prices on airline profitability.
The situation then witnessed Israel launching an offensive strike aimed at Iran’s nuclear facilities and military installations, and Iran also replying swiftly with a series of missile and drone attacks. This had led to fears of a broader regional war. As an after-effect of this Israel-Iran conflict, airlines had to quickly clear Israeli, Iranian, Jordanian, and Iraqi airspace and flight operations got halted, with DAL having paused flights from New York-JFK to Tel Aviv through August 31.
Wrapping Up
The recent easing of the Israel-Iran conflict, coupled with the subsequent drop in oil prices, had an immediate positive impact on the market sentiment and investor optimism. Airlines are hopeful that the reduction in fuel prices shall act as a sigh of relief for future profitability.
Despite these recent positives, industry players continue to grapple with challenges like the Boeing (BA) and Airbus-related delivery delays, fluctuating passenger demand, and rising labor costs. The industry is also facing increased competition, with several low-cost carriers expanding their operations and challenging the traditional major airlines.
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Airline Stocks Bounce Back on Monday's Trading: Here's Why
Key Takeaways
Players in the Zacks Airline industry have made a notable comeback by performing well on the bourses on Monday, June 17, 2025. Industry heavyweights like Delta Air Lines, Inc. (DAL - Free Report) , United Airlines Holdings, Inc. (UAL - Free Report) ), American Airlines Group Inc. (AAL - Free Report) and Southwest Airlines Co. (LUV - Free Report) soared 5.14%, 6.11%, 5.11% and 1.48%, respectively, from Friday’s closing price. Other airline stocks like Alaska Air Group, Inc. (ALK - Free Report) and JetBlue Airways Corporation (JBLU) have also reported upside, with their shares having gained 2.80% and 2.23%, respectively, from the previous day's closing.
The NYSE ARCA Airline index, which tracks the performance of major airlines, was revised upward, consequently ending Monday’s session at $55.32, up 3.36%, further emphasizing the positive market reaction.
Of the abovementioned stocks, Delta Air Lines, Southwest Airlines, Alaska Air and JetBlue Airways currently carry a Zacks Rank #3 (Hold). While United Airlines carries a Zacks Rank #4 (Sell), American Airlines presently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
What's Behind the Recovery Show on Monday?
Given that fuel expenses are a significant input cost for the aviation space, the decline in oil prices bodes well for the bottom-line growth of airline industry participants. To this end, crude oil futures were down about 2% on Monday following the easing of tensions between Israel and Iran. This has led to the northward movement of airline stocks.
Currently, Iran is seeking to de-escalate the situation and negotiate a ceasefire with Israel and halt further military action. Such diplomatic moves by Iran have led to a reduction in market fears of global oil supply disruptions, thereby gaining investors’ confidence. The oil market calming down is a major relief to industries like airlines, which are heavily dependent on oil.
The upside performance of airline stocks is being considered as a recovery because it came just after a significant downturn on Friday, June 13, 2025, when tensions in the Middle East (a critical region for global oil supply) escalated at their peak, and oil prices surged 7%. The NYSE ARCA Airline index had also dipped 4.3%. At that point, many airline stocks had dropped as investors feared the long-term impact of higher fuel prices on airline profitability.
The situation then witnessed Israel launching an offensive strike aimed at Iran’s nuclear facilities and military installations, and Iran also replying swiftly with a series of missile and drone attacks. This had led to fears of a broader regional war. As an after-effect of this Israel-Iran conflict, airlines had to quickly clear Israeli, Iranian, Jordanian, and Iraqi airspace and flight operations got halted, with DAL having paused flights from New York-JFK to Tel Aviv through August 31.
Wrapping Up
The recent easing of the Israel-Iran conflict, coupled with the subsequent drop in oil prices, had an immediate positive impact on the market sentiment and investor optimism. Airlines are hopeful that the reduction in fuel prices shall act as a sigh of relief for future profitability.
Despite these recent positives, industry players continue to grapple with challenges like the Boeing (BA) and Airbus-related delivery delays, fluctuating passenger demand, and rising labor costs. The industry is also facing increased competition, with several low-cost carriers expanding their operations and challenging the traditional major airlines.