As Spring Airlines chairman Wang Zhenghua celebrates becoming a billionaire as his airline stock price surged 44% after its initial public offering (IPO), shares in US carriers are impacted by snow and oil price rally, which depresses recent gains.
Like many airlines Spring’s shares were boosted by the positive gains for airlines in general due to soaring demand and falling oil prices. Spring had the added benefit of being the first IPO of a Chinese airlines for more than a decade that helped to pique investor interest further.
Wang started the airline in 2005 and owns a 26% stake in the company, as well as 35.7% percent of the airline’s parent company Shanghai Spring International Travel Service Co.
Shares traded up 44% on the day of its IPO on January 21, and have since risen a further 10%.
Although US airlines stock remained buoyant last week thanks to largely positive results and low oil price, this morning airline stocks have shown a significant move downwards in early trading – the NYSE Arca Airline Index was 2.2%. This could mark a shift in fortunes as investors realise that the falling oil price is less likely to benefit shareholders and will be either passed onto consumers or more likely passed onto staff in the form of wage increases. Time will tell.