The transportation exchange traded fund (ETF) dipped slightly in midday trading after reports that Southwest Airlines (LUV) tried to hide safety problems emerged.
Federal Aviation Administration (FAA) inspectors contend that the airline tried to hide its problems within its maintenance program and even went so far as to keep out an inspector who noticed the problems, report Drew Griffin and Scott Bronstein for CNN. Shares for the airline fell as much as 2% midday.
Southwest, for its part, hasn’t commented on the matter. But the news isn’t the sort that would inspire confidence in travelers, some of whom may already be skittish about air travel. If they start looking for other airlines, it’s undoubtedly going to hurt Southwest, which is 1.5% of the iShares Dow Jones Transportation Average (IYT). The fund is down 0.6% midday.
To date, IYT has been solid, up 10% year-to-date.
For full disclosure, some of Tom Lydon’s clients own shares of IYT.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.