Posts Tagged ‘volcano’

Is falling airline stocks due to Icelandic volcanic eruption a buying opportunity?

Tuesday, April 27th, 2010

Ever since Iceland?s Eyjafjallaj?kull volcano erupted, air travel in Europe was frozen throughout Europe. Consequently, stock prices of airlines fell as a result. As investors, we have to wonder whether this is a buying opportunity. Will the ensuing disruption be over in a matter of weeks?

Well, we aren?t so sure because we are not scientists. As this article reported,

The last time Eyjafjallaj?kull erupted, it continued belching the Earth’s unsettled insides for 14 months, from December 1821 to January 1823.

Scientists do not expect Eyjafjallaj?kull to keep northern Europe’s airports closed for 14 months, but they suggest that Eyjafjallaj?kull’s impact on world travel might not end with the end of this current eruption.

Moreover, Iceland’s "Angry Sister" hasn’t even awoken yet. The three times in recorded history when Eyjafjallaj?kull has erupted, its neighbour, the much larger Katla, has followed suit.

Data do not yet suggest that a Katla eruption is imminent. Yet, in some respects, it is the far greater concern, both in Iceland and beyond.

Mind you, Katla is 10 times more powerful than Eyjafjallaj?kull. So far, there?s no sign of any activity of Katla. But if Katla erupts, it may trigger a worst case scenario for the airlines business.