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Major Airlines Bump Up Dividends: More Hikes on the Way?

It was not too long ago that stocks in the airline space were struggling on the financial front, many of them even filing for bankruptcy protection. Airlines were struggling to stay afloat in the early part of the century, grappling with issues like high fuel costs, among others. Moreover, the U.S. terror attacks in Sep 2001 dealt a severe blow to airlines. To deal with such adverse factors, airlines resorted to cost-cutting measures like headcount reduction.

Gloomy Backdrop

Given this gloomy background, it is no surprise that big players in the space like Delta Air Lines DAL had filed for bankruptcy. The Atlanta, GA-based company had slipped into bankruptcy in 2005 and eventually managed to come out of it following its merger with Northwest Airlines. United Airlines had also filed for bankruptcy in 2002. The company in its current form -- United Continental Holdings UAL -- was formed in 2010 following the merger of United Airlines and Continental Airlines.

Meanwhile, American Airlines had filed for bankruptcy in 2011. The subsequent merger of AMR (American Airlines' parent group) and US Airways in 2013, which resulted in the formation of American Airlines Group AAL, proved advantageous.

Oil Price Dip: A Godsend

The outbreak of the deadly Ebola virus in 2014 hurt stocks immensely in the airline space. However, Ebola-related fears subsided gradually and this coincided with the free fall in oil prices. With costs associated with fuel being one of the most significant expenses for airlines, soft crude prices have resulted in massive savings for carriers, thereby boosting...


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