American Airlines Group(NASDAQ:AAL), a major passenger and cargo carrier, closed Thursday at $11.79, down 5.38%. The stock moved lower after bearish research highlighted fuel-cost exposure and balance sheet risk. Investors are also closely watching fuel prices and margin trends.
Trading volume reached 125 million shares, coming in about 114% above its three-month average of 58.4 million shares. American Airlines Group IPO'd in 2005 and has fallen 39% since going public.
How the markets moved today
The S&P 500(SNPINDEX:^GSPC) slipped 0.58% to 6,830, while the Nasdaq Composite(NASDAQINDEX:^IXIC) eased 0.26% to 22,749 as broader markets consolidated recent gains. Among airlines, Delta Air Lines(NYSE:DAL) closed at $61.31 (-3.95%) and United Airlines(NASDAQ:UAL) finished at $95.43 (-5.03%), reflecting similar pressure on sector rivals.
What this means for investors
Jet fuel spot prices have been rising since the weekend when the U.S. and Israel began bombing Iran. The conflict has spread around the Middle East and Iran has declared the Strait of Hormuz closed and attacked some ships that attempted the route.
That has led to a further spike in jet fuel prices today. Additionally, Rothschild & Co Redburn downgraded American Airlines on the jet fuel cost risk. Investors are concerned as the carrier already operates with very tight margins.
A potential positive for American stock is that it became the first U.S. airline to restore flights to Venezuela, adding new routes from Miami that will potentially add revenue. The airline had already announced plans for a $1 billion expansion to add gates at the airport.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.
