3 Airline Stocks That Could Benefit From Lower Oil Prices

Oil markets just caught a break, with Saudi Arabia preparing to restart a major export pipeline and Brent crude briefly dropping on the news. Cheaper energy can quickly reshape cost structures for fuel hungry businesses, which can ripple into earnings and investor sentiment. This piece walks through three stocks from our Global Oil-Importing Industries Benefiting from Lower Energy Costs screener that appear closely tied to this move in crude and may merit closer attention at this time.

The stocks highlighted below are just a sample, and the full screen surfaced 56 more companies with equally detailed stories that are not covered in this article. To identify and analyze your own highest conviction ideas from this theme, head straight to the Global Oil-Importing Industries Benefiting from Lower Energy Costs screener.

InterGlobe Aviation (NSEI:INDIGO)

Overview: InterGlobe Aviation operates IndiGo, a large low cost airline that flies passengers and cargo across India and international routes.

Operations: InterGlobe Aviation generates virtually all of its ₹890,497 million revenue from air transportation services, including passenger and cargo flights.

Market Cap: ₹1,944.9 billion

InterGlobe Aviation is one of the purest expressions of this screener’s theme. Its jet fuel heavy IndiGo network in oil importing India feels lower crude prices almost immediately in its cost base.

"The introduction of the BluChip loyalty program is expected to drive customer retention and spend, leading to increased passenger revenues and enhanced insights for operational efficiency."

For anyone tracking this story, the real swing factor is how one unseen pressure on unit costs ultimately filters through to margins.

That unit cost pressure is only half the picture, and the full narrative for InterGlobe Aviation describes how fuel, loyalty economics and network expansion could reshape the long term earnings profile.

Norwegian Air Shuttle (OB:NAS)

Overview: Norwegian Air Shuttle is a European low cost airline group that flies passengers across Scandinavia and wider Europe, where fuel is a major expense.

Operations: Norwegian Air Shuttle generates NOK 30,415 million revenue from Norwegian and NOK 8,020 million from Widerøe, with minor eliminations.

Market Cap: NOK13.4 billion

Norwegian Air Shuttle provides direct exposure to a fuel intensive carrier in oil importing Europe, where changes in crude prices can quickly affect earnings.

"The growth in passenger numbers and market share in Norway, along with increasing corporate travel agreements, indicates a robust demand for Norwegian Air Shuttle's services, suggesting potential revenue growth in the future."

The key issue now is how one unresolved cost and funding pressure shapes margins if fuel prices remain relatively favorable for an extended period.

If that funding question is on your mind, the full narrative for Norwegian Air Shuttle shows how Norwegian Air Shuttle’s cost base, demand trends and balance sheet pressures could be decoupling.

LATAM Airlines Group (SNSE:LTM)

Overview: LATAM Airlines Group runs a large passenger and cargo airline network across Latin America and long haul international routes, making fuel costs critical.

Operations: LATAM Airlines Group generates about US$15.9b from air transportation, with revenue spread across Brazil, Chile, Peru, the U.S. and Europe.

Market Cap: CLP14,487.5b

LATAM Airlines Group is tightly linked to the screener theme because its wide body international flying and regional Latin American routes consume significant jet fuel, so lower crude prices directly influence operating costs and earnings potential.

"Growth in digital connectivity, including remote work and widespread adoption of virtual meetings across Latin America, is expected to deliver a structural and permanent decline in business travel demand, reducing LATAM's premium-class revenues and compressing top-line growth."

What happens to LATAM Airlines Group’s margins now will likely depend on how one unseen pressure on fuel sensitive profitability ultimately plays out.

If that pressure on fuel sensitive profitability is your key question, the full narrative for LATAM Airlines Group explains how LATAM Airlines Group could turn cost swings into accelerating leverage on earnings potential.

Seeking Alternatives Before The Crowd

Oil moves fast and fresh ideas do not stay under the radar for long. Consider potential opportunities while momentum is still building and valuations have not fully caught up, and act in line with your investment plan.

• Identify cash-generating leaders before momentum headlines hit by scanning the 172 high quality undervalued stocks curated from companies pairing strong balance sheets with meaningful free cash flow.
• Review the 40 power grid technology and infrastructure stocks to explore businesses positioned around grid upgrades, electrification projects and hardware that keeps energy flowing.
• Evaluate the 95 robotics and automation stocks focused on automation players tied to manufacturing, logistics and productivity upgrades while valuations still look reasonable.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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