Airline Stocks Spike on Crude's Drop

Airline shares rallied Tuesday as oil prices fell.

Hurricane Gustav's effect on the Gulf Coast and nearby oil facilities was much less than originally feared, sending crude oil futures plummeting. After jumping to more than $115 a barrel in the run-up to the storm, light sweet crude more recently was trading at $108.07 on the New York Mercantile Exchange.

Airline stocks, sensitive to fuel prices, responded accordingly. American (AMR Quote - Cramer on AMR - Stock Picks) was rising 13.3% to $11.70. Delta (DAL Quote - Cramer on DAL - Stock Picks) rose 16.4% to $9.46. United (UAUA Quote - Cramer on UAUA - Stock Picks) rose 16.7% to $12.97.

Among low-fare carriers, AirTran (AAI Quote - Cramer on AAI - Stock Picks)was up 16.6 to $2.80. Southwest (LUV Quote - Cramer on LUV - Stock Picks) rose 4.6% to $15.93.

The Amex Airline Index was trading up 9.6% to 26.71.

In recent months, the index has fluctuated in line with oil prices. It has more than doubled since reaching an all-time low of $12.66 in mid-July, when oil reached its all-time high of $147 a barrel.

Although Gustav's impact was less than expected, airlines on Tuesday were still evaluating when to resume flights to Louis Armstrong International Airport in New Orleans.

The airport has not yet reopened, after all flights were cancelled Monday. Southwest has said it plans to resume flights Wednesday, depending on the availability of airport security personnel, facilities and services.