Jan 12th, 2024 – On Friday, airline stocks, such as Delta Airlines and United Airlines, respectively lost 8% and 9% of their value. An ETF that includes airline shares was down 4.8%. The S&P 500 started the market day well, but was immediately dragged down by the airline sector. There are three reasons beyond this tumble:
- The Federal Aviation Administration (FAA) will audit the Boeing 737 Max 9 production line to ensure quality control and security. The announcement has arrived one week after the shocking Alaska Airlines accident;
- Delta has posted a disappointing forecast on its full-year EPS (earning per share) of $6 to $7, below the previous estimate that was of more than $7.
- Oil prices grew around 4% after the US and UK launched strikes in Yemen after recent attacks by Houthi rebels on ships in the Red Sea.
Citigroup has announced its worst quarterly result in 15 years. In fact, they reported a loss of $1.8 billion and revenues decreased by 3% compared to last year’s returns in the same quarter. Citigroup CEO Fraser called the performance very disappointing because of the charges tied to overseas risks, but he also said that the group has made substantial progress simplifying the bank last year. Unfortunately, the CEO thinks that this is not enough. In order to boost its results and share price, Fraser has decided to cut 10% of the Citigroup workforce over the medium term, meaning that he will fire around 20,000 people.
Shares of Tesla, the electric vehicle manufacturer, experienced a 4% decline in response to price reductions on the Model 3 and Model Y in China. Additionally, the company announced a temporary production halt at its German factory due to supply chain constraints arising from incidents in the Red Sea.
Author: Filippo Ferrero