When oil markets are disrupted and prices leap, airline stocks are among the first to feel the effect. Fuel accounts for roughly a quarter of big carriers’ operating costs. But the timing, nature and geography of the current Middle East conflict pose bigger questions for investors to monitor.
In general, big airlines are in decent financial health — at least viewed from 30,000 feet. They have been bolstered by robust travel demand, particularly for premium seats, and subdued oil prices. The MSCI World’s passenger airlines sub-index has risen about two-thirds since a trough in September 2022, according to LSEG data.
Zoom in and the situation varies based on how a carrier’s flights criss-cross the globe. Without access to Russian airspace, European and most Asia-based operators are already navigating a crowded corridor south of the Black Sea and over Georgia, adding to costs and flying times.