It is a no-brainer that low oil prices have been nothing short of a godsend for stocks in the airline space. Just when Ebola fears were wreaking havoc on airline stocks in 2014, oil prices started to dip from over $100 levels, courtesy an over-supplied oil market as demand remained lackluster. Since fuel costs account for a major chunk of an airline company’s operating expenses, the massive drop in oil price (currently hovering around the $40-per-barrel mark) has resulted in impressive bottom-line performances at carriers.

Bankruptcy Filings: A Thing of the Past for Legacy Carriers

Needless to say, the massive savings emanating from cheap oil has caused a rebound in the financial health of carriers. Most carriers had been under pressure on the financial front, even a few years back, as they struggled to cope with high fuel costs along with other challenges. Financial woes caused many leading carriers to file for bankruptcy. For example, Atlanta, GA-based Delta Air Lines (DAL – Analyst Report) had plunged into bankruptcy in 2005. Its merger with Northwest Airlines, a few years later, helped the carrier come out of the mess.

American Airlines too 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 – Analyst Report), was a masterstroke. The carrier, which does not hedge fuel costs, has witnessed solid profits in recent times.

Financial Rebound: A Blessing for Employees and Investors

When carriers were under financial strain, their employees too had to bear the brunt. Pay cuts were a common practice then. However, with carriers currently in the pink of financial health, the situation is definitely looking better for employees.

The strong balance sheet of airline companies has also prompted a surge in shareholder-friendly activities like increased dividend payouts and an uptick in buyback activities. Naturally, employees too are now expecting better remuneration. Meanwhile, labor deals have taken center stage with major carriers including United Continental Holdings (UAL – Analyst Report) and American Airlines apart from low-cost ones like Spirit Airlines (SAVE – Snapshot Report) being highly active on the labor font.