An exchange traded fund (ETF) investing in air carriers was lower Monday after top component Southwest Airlines cancelled flights over the weekend as it continues to inspect its jets for cracks.
Southwest shares were down nearly 4% in preopen trading Monday and the company has grounded 79 planes following an incident Friday that forced an emergency landing.
Southwest is the largest holding of the $31 million Guggenheim Arca Airline ETF (NYSEArca: FAA) at 16.2% of assets.
“This thinly traded ETF is one of just two ETFs to offer investors exposure to a basket of airlines,” said Morningstar’s Robert Goldsborough in a March 15 analyst report on the ETF.
“The fund has attracted a lot of attention of late, given air carriers’ strong recent price performance, which has been the result of recent consolidation in the space, improving carrier balance sheets, better-than-expected revenue growth (owing to an improved economy), lower-than-expected oil prices, and cost cuts,” he wrote. [Airline ETF Takes Flight.]
The other airlines ETF is Direxion Airline Shares (NYSEArca: FLYX).
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