Northwest leads airline shares higher on oil drop
CHICAGO (Reuters) - Airline shares rocketed higher on Tuesday, led by Northwest Airlines <NWA.N>, on a sharp decline in the price of crude oil, which is directly linked to the price of jet fuel.
Northwest stock gained 17.5 percent to $8.95 on the New York Stock Exchange. Delta Air Lines <DAL.N> shares gained 11.1 to $7.99 on NYSE. American Airlines parent AMR Corp <AMR.N> was up 9.4 percent at $8.47 on NYSE. The Amex airline index was up 4.9 percent.
Calyon Securities analyst Ray Neidl linked the rally to a sell-off in the price of Nymex crude, which was down $3.31 at $115.44 after notching a record high near $120 on Monday.
The airline industry has been pummeled by soaring fuel prices that have offset many cost-cutting initiatives undertaken by the carriers in recent years.
Neidl said Northwest and Delta shares may also be taking additional support from the outlook for their upcoming merger. The two airlines intend to join forces to become the world's largest airline. "I imagine the market is starting to take some recognition of that," he said.
(Reporting by Kyle Peterson, editing by Mark Porter)