Stocks within the airline sector are plummeting, with Southwest (LUV) seeing its biggest drop in three years this afternoon and American Airlines (AAL) is having its worst day since coming out of bankruptcy in 2013, Bloomberg reports. The online publication added that airline stocks are falling due to signs that a year filled with low fuel costs has left airlines positioned to increase competition for customers with cut-rate fares and more routes
Carriers are able to finance expansion projects and offer customers less expensive flights as oil prices remain near $60 per barrel, Bloomberg noted.
Another contributing factor to the slump in airline stocks is the rally in the price of oil. The commodity is up amid a decline in U.S. crude prices and tensions in the Middle East. Fuel is an airlines largest expense.
Separately, TheStreet Ratings team rates UNITED CONTINENTAL HLDGS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED CONTINENTAL HLDGS INC (UAL) a HOLD. The primary factors that have impacted our rating are mixed-some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and notable return on equity. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and poor profit margins."