American Airlines Group Inc. (NASDAQ:AAL) stock is falling on Monday due to escalating geopolitical tensions in the Middle East, causing a spike in oil prices.
The decline is compounded by a recent capacity guidance downgrade and a rejected merger proposal that leaves the company managing its turnaround independently.
The Nasdaq is down 0.53% while the S&P 500 has shed 0.49% and AAL is sliding faster than the Industrials sector’s 1% drop.
Geopolitical Conflict Hits Energy
Crude oil rose more than 3% above $86 per barrel as the U.S. and Iran exchanged direct strikes for the first time in roughly a month.
U.S. forces targeted Iranian rocket launchers preparing to deploy mines in the Strait of Hormuz, while Iran claimed attacks on U.S. bases in Jordan, according to Trading Economics.
Airlines Absorb Fuel Expenses
“I don’t think you’re going to see prices go up significantly,” Airlines for America CEO Chris Sununu told host Chris Stirewalt on NewsNation’s “The Hill Sunday.” Sununu noted carriers are “eating the cost” of expensive jet fuel. “They’re not passing all the cost to the consumers. So they’re staying competitive.”
Margin Pressures and Financials
Bureau of Labor Statistics data showed airline fares rose 25.5% year over year in July.
However, American Airlines reported its second-quarter fuel expense jumped 83.3% to $4.88 billion, with higher fares offsetting under half of the increase.
Technical Analysis
From a longer-term chart perspective, AAL is still trying to stabilize after losing altitude from its mid-year highs, and it’s now trading 8.7% below its 20-day SMA and 14.3% below its 50-day SMA—both consistent with a market that’s selling rallies. At the same time, the stock is only 4.3% below its 200-day SMA.
The moving-average structure is mixed: the 20-day SMA is below the 50-day SMA (bearish near-term), but the 50-day SMA remains above the 200-day SMA (the golden cross that occurred in June).
- Key Resistance: $13.50
- Key Support: $13.50
AAL Price Action: American Airlines Group shares were down 2.56% to $13.29 at the time of publication on Monday, according to Benzinga Pro data.
Image via Shutterstock
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