Oil prices shrink airlines
U.S. airlines are going into crisis mode as oil prices hit an all-time peak of $119.90 a barrel on Tuesday. A report by USA Today suggests that fares are going to rise — as much as 15 percent to 20 percent — as airlines try to stay in business. And in spite of the evidence pointing toward a downturn in the airline economy, investors are not going along for the ride. According to the report, the Amex Airline index fell 12.35%, and all but two carriers, JetBlue and Southwest, saw their shares lose more than 10% of their value — that’s just this week. Shares of United and AirTran were hit especially hard, falling almost 37% and 21%, respectively. In addition to raising fares, the report says, airlines are expected to cut capacity as well. The most endangered routes are leisure-oriented and secondary business travel routes such as JetBlue’s flights between New York and Tucson.
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