New York (AP) - Airline stocks faced a further sell-off Thursday
as oil prices continued to climb.
The Amex Airline Index fell 82 cents, or 2 percent, to 40.58 as light, sweet crude for December delivery gained 86 cents to $97.23 a barrel on the New York Mercantile Exchange. The contract rose to a record above $98 a barrel in the previous session, but settled at $96.37 a barrel on Wednesday.
Investors have been urging airlines to raise fares to offset surging fuel prices, which represent one of the industry's highest costs.
Southwest Airlines Co. introduced a program called "Business Select," which raises fares for business flyers, while guaranteeing they will be the first to board, gain additional frequent flyer credits and receive a complementary cocktail. In a note Wednesday, Morgan Stanley analyst William Greene called the service a "cleverly marketed fare increase," that will modestly affect results.
The program is already factored into most estimates and the company's share price, Greene added.
The move is expected to attract new customers, along with Southwest's introduction of assigned seating, which it hadn't offered previously.
"Lack of business class and assigned seats have long been a limiting factor in attracting business travelers to Southwest," Greene wrote.
Southwest shares fell 14 cents to $13.13 in midday trading.
US Airways Group Inc.'s stock posted the biggest declines in the sector, with a drop of 98 cents, or 4.3 percent, to $21.62. AirTran Holdings Inc. fell 35 cents, or 3.8 percent to $8.88 as Continental Airlines Inc. dropped $1.11, or 3.8 percent, to $28.49 and Delta Air Lines Inc. sunk 52 cents, or 3 percent, to $16.92.
SkyWest Inc. posted the only increase, and a sharp one at that, after posting a rise in third-quarter profit due to fuel reimbursements from its carrier partners. SkyWest shares rose $1.46, or 5.7 percent, to $27.14.
Want more analysis like this? CAPA Membership gives you access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find out more and take a free trial.