A Double Whammy for the Airline ETF

| About: Guggenheim Airline (FAA)
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Another blizzard is socking the Midwest and East Coast, and the protests on the streets of Egypt are threatening to send oil prices higher. Can the airline exchange traded fund (ETF) stare down the pressure?

After reporting solid fourth-quarter results and ushering in a new era of optimism for the industry, airlines are starting to have a tough time again. In the last 10 days, Guggenheim Airline (NYSEARCA:FAA) has lost 7%. Rising oil prices and travel interruptions can’t be helping much.

Oil prices topped $100 a barrel on Monday before pausing on Tuesday as investors watched developments in Egypt.

The risk here is if the protests go on much longer, the impact on oil prices could be huge for consumers and airlines alike, says ABC News. The biggest costs for airlines is in the form of fuel, and they’ll be passed along to travelers if they remain elevated for a long time. However, analysts have remarked that they can only pass along those costs so much before consumers just decide not to fly.

Meanwhile, flight cancellations are wreaking havoc. More than 4,500 flights today have been canceled; the total number of flights canceled is nearly 8,000.

Despite that, FAA has stood its ground in early trading, not making any big gains, but not losing anything, either.

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Transportation ETF, Airlines, FAA