Rising oil prices are adding to the aviation industry’s concerns. The industry has already been struggling due to year-long travel restrictions compelled by the COVID-19 pandemic. Thus, we think the shares of Delta Air Lines (NYSE:DAL), United Airlines (UAL), and American Airlines (NASDAQ:AAL) are best avoided now. Read on.Oil prices hit a six-year high on July 6 after OPEC+ failed to reach an agreement regarding production levels and talks were postponed indefinitely. While oil prices have declined marginally over the past two days, controlled supply levels should drive oil prices higher in the near term.
Rising oil prices are likely to negatively impact the already fraught airlines industry. In response to rising jet fuel prices, the International Air Transport Association (IATA) warned that oil prices will cast a shadow over the airline industry’s substantial recovery from the pandemic driven slowdown. IATA expects the airline industry to incur losses of $47.7 billion in 2021.
Given the airline industry’s weak recovery, we believe shares of Delta Air Lines, Inc. (DAL), United Airlines Holdings, Inc. (NASDAQ:UAL), and American Airlines Group Inc. (AAL) are best avoided now.