In the past six months, just about every story written about airlines has had some relation to the price of oil. Unfortunately the price of oil has caused a few carriers to declare bankruptcy, and some have gone out of business. The lingering, legacy and low-cost carriers, stride to cut costs to deal with rising prices of oil. With oil at its peak and tumbling, airline stocks have felt a boost and has allowed me to confirm my Dad’s question: Is Oil a Proxy for Airline Stocks?
When in doubt, go to the charts.
On the left, is the iPath S&P GSCI Crude Oil Total Return (NYSE) chart, which displays a year’s data.
On the left is the AMEX Airline Index, spanning out a year’s data.
What can be said, it’s clear that there is an inverse relationship. If you match the data, when one stock increases, the other tends to decrease. To investors, I say that perhaps it’s the time to be looking at airline stocks, since oil appears to have reached it’s peak. (Disclaimer: That’s my opinion, not an official / educated view). I’m curious to see if this relationship continues. The travel industry, in general, seems to have an inverse relationship with oil. However, I won’t get too ahead of my self.
Side note: Not so long ago, I wrote a post hinting the relationship.
Images: bigcharts.com
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Interesting site!
My son, an aspiring pilot, and I share a passion for aviation (as well as Charles Lindbergh).
Good luck on your college search.
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