Prices of the US benchmark for crude, the West Texas Intermediate, came closer to the European benchmark, Brent crude oil. The gap is narrowing and this means a benefit for the airline companies.
Jet fuel, or kerosene, prices are following the price fluctuations of crude. These, along with labor, represent the biggest costs for the airlines.
"To the extent we see WTI and Brent come together, I think that's helpful and the hedges that we have in place will really give us much better protection than they were when WTI was trading at a discount," Southwest Airlines Chief Financial Officer Laura Wright said in a recent interview.
The narrowing spread is considered a positive for the carriers, says Bill Warlick, a senior director at Fitch Ratings who watches airlines.
"We do have some WTI hedges, so the recent tightening of the WTI-Brent spread has helped the performance of those trades," American Airlines spokesman Sean Collins said.
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