EasyJet, IAG, Wizz Air share prices plunge as aviation risks rise

By:
on Oct 18, 2023
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  • Airlines like United, Delta, and EasyJet published strong financial results.
  • But they all warned about the rising risks in the industry as the war in Israel continues.
  • There are concerns about the rising jet fuel prices.

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Airline stocks continued their downtrend as risks in the industry continued. IAG (LON: IAG) share price slipped to a low of 140p, the lowest point since March 2023. It is nearing a bear market as it plunged by over 17% from the year-to-date high.

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IAG is watched closely because of its size and nature of operations. It runs British Airways, which serves Europe and other international operations. The company also owns other smaller airlines like Iberia, Aer Lingus, Iberia Express, LEVEL, and Vueling.

EasyJet (LON: EZJ) share price nosedived to 365p, the lowest level since January. Unlike IAG, EZJ shares have already moved to a bear market since it has plummeted by over 30% from its highest level this year.

Wizz Air (LON: WIZZ) stock price has fared much worse than other London-listed airlines. It slipped to a low of 1,572p, its lowest point since November last year. Other well-known airline stocks like Lufthansa and Ryanair have also dropped.

Airline stocks have dropped for two main reasons. First, the price of jet fuel is soaring as the war between Israel and Hamas continues. Brent jumped to $91.77 while West Texas Intermediate (WTI) soared to $87.35. 

Data compiled by IATA shows that the average jet fuel price was averaging at $121 per barrel, higher than where it was a few months ago. These prices will continue rising if Brent soars to over $100 as many analysts expect.

Jet fuel is a major cost for all airlines, meaning that its surge will lead to lower margins. On Tuesday, United Airlines said that its net income rose to $942 million last quarter as its revenue hit $14.48 billion. It nonetheless warned that higher jet fuel price will affect its profitability.

Other airlines that have published their earnings recently like Delta and EasyJet have also warned about fuel prices. Delta lowered its guidance last week.

The other risk is that wages in the industry are rising. British Airways is about to hike wages to prevent an impending strike. All these costs will likely affect all airline profit margins. Further, the wars in Europe and the Middle East will affect airline demand.

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