Israeli Airline Stocks Soar After Foiled Plane Hijacking Attempt

Shares of Israeli airlines El Al and Israir surged on the Tel Aviv Stock Exchange following an incident on a Flydubai flight bound for Israel, which is being investigated as a potential terror attack. El Al's stock rose 6% and Israir's climbed 5% as investors began to price in the implications of the event.

The flight, carrying mostly Israeli passengers, many of whom were connecting from Thailand, was reportedly prevented from becoming a terror incident due to the bravery of the Israeli passengers. The use of Flydubai for the route was primarily a cost-saving measure for many travelers, as it was cheaper than flying directly with Israeli carriers.

However, the incident is expected to significantly boost the appeal of flying with Israeli airlines due to security concerns. Many travelers already preferred Israeli carriers for their perceived security advantages, and this event is likely to attract many more, driving up demand and stock prices.

Initially, the market reacted mildly, but as the day progressed, trading volumes and stock gains increased. El Al, in particular, benefits from routes like the one to Thailand, which are highly profitable due to limited competition. An increase in passengers choosing El Al for this route could lead to substantial revenue gains.

In addition to the security incident, other factors are positively impacting Israeli airlines. A recent stabilization and slight decrease in jet fuel prices, despite remaining high, offers some relief on operational costs. Furthermore, airlines sell tickets in dollars, making them sensitive to currency fluctuations. A recent slight strengthening of the dollar against the Israeli shekel, influenced by Wall Street declines and rising U.S. Treasury yields, also benefits their revenue.