Airline shares slump as oil price rises

29th Mar 2006

Airline stocks have slumped on the New York Stock Exchange, led by American Airlines’ parent AMR Corporation and Continental Airlines due to worries about a spike in crude oil prices.
Oil prices have risen three percent to a seven-week high on concerns over supply disruptions from Nigeria.

AMR and Continental have been the sector’s top performers in recent weeks, up 17 and 25 percent so far this year, respectively.

This has been helped by optimism about faster than expected revenue growth bolstered by recent fare increases.

Many carriers have cut employee wages and taken other cost reduction moves in recent years.

Although even higher oil prices could force them into a painful new round of cost cuts.



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