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U.S. airline shares tumble on oil price rally
A Delta Airlines plane is seen at O'Hare International airport in Chicago, Illinois November 15, 2006.
Credit: Reuters/Frank Polich
(Reuters) - Airline shares fell broadly on Tuesday, with US Airways Group's stock leading the decline, as the price of oil rallied, which directly influences the cost of jet fuel.
US Airways shares plummeted 10.4 percent to $7.97 on the New York Stock Exchange. Shares of United Continental Holdings were down 7.78 percent at $21.55, and Delta Air Lines' shares fell 6 percent to $10.18, both on the NYSE.
U.S. crude oil futures rose $1.52 to $104.76 after trading beyond $105 for the first time since May 2011. The gains followed news on Monday that Iran halted exports to British and French companies ahead of a European Union embargo.
Jet fuel is one of the highest costs for airlines. US Airways, which does not hedge its fuel consumption to offset shocks, is more vulnerable than rivals to price spikes, said Basili Alukos, an airline analyst at Morningstar.
The airline industry has been struggling to maintain stability after a years-long downturn that was exacerbated by volatile fuel prices.
(Reporting By Kyle Peterson; Editing by Maureen Bavdek)
(This story corrects fourth paragraph to show US Airways does not hedge fuel consumption)
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