Russia’s ongoing invasion of Ukraine continues to have impacts across a number of global industries. It seems airline stocks are feeling pressure today as many of the highest flyers experience turbulence. United Airlines (NASDAQ:UAL), American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL) and Southwest Airlines (NYSE:LUV) each closed down roughly 5% today as much of Eastern Europe closes its airspace.
So what is going on with airline stocks today?
Essentially, Russia and Ukraine have both become no-fly zones for commercial flights. Indeed, Russia has closed its airspace to dozens of carriers, including those North America and the European Union. This has consequences travel companies, as airplanes now must take longer flight paths.
Importantly, many on Wall Street see the ongoing Russia-Ukraine conflict as worsening pain that the industry still faces from Covid-19.
Julia Lo Bue-Said, CEO of Advantage Travel Partnership, commented on the situation:
“We will have to see the extent of how these latest events impact consumer confidence – but let’s not forget how Covid restrictions have suppressed international travel demand. Travel agents remain best placed to help consumers manage any changes that could [materialize] to booked travel plans.”
Airline Stocks Drop Amid Mounting Travel Concerns
Beyond new airspace restrictions, rising jet fuel costs present an additional element of uncertainty.
Russia is one of the largest producers of natural gas in the world. As such, the current conflict has resulted in inflated oil prices, which may translate to increased jet fuel costs. Jet fuel remains the second largest expense for airlines. This means that should oil prices stay elevated, travel costs may rise as airlines are unable to absorb higher supply costs.
While experts emphasize that for right now, impacts on most travelers remain limited, airline stocks will continue to remain in focus. They joined other travel-related equities like cruise stocks in declines today.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
