You would think that with the recent uptick in oil prices, airline stocks would have taken a huge hit, as oil and airlines have tended to be inversely related. And yet the U.S. Global Investors gained 6.8 percent over the same period, according to Benzinga’s Todd Shriber.
This is the case despite the fact that most carriers hedge fuel costs, a means to lock in lower prices for a contractual period of time. Airlines that entered such a contract when oil prices were much higher are still obligated to pay those rates, even though oil is now significantly lower.
Article summary written by U.S. Global Investors.
Past performance does not guarantee future results.