“As the cloud of volcanic ash that shuttered Europe’s airports clears, the industry has begun to handicap its losses. On Wednesday, the International Air Transport Association, an industry group, put the damage at $1.7 billion in lost revenue for the airlines during the five-day flying ban,” Will Swarts Reports From Smart Money.

Swarts goes on to say, “But not all airlines were affected equally. Carriers whose business does not revolve around Europe have been largely unscathed, analysts say. Regardless of whether the volcano weighs on the recovery of the broader industry, the five major United States carriers that fly to Europe may offer investors opportunities for solid returns, they say.”

“The airline industry was in the midst of an aggressive comeback when Iceland’s Eyjafjallajokull volcano began ejecting a fog of soot into the sky last week. The Claymore/NYSE Arca Airline ETF (NYSE: FAA) had climbed 15.5% since the beginning of the year, outpacing the 8.3% gain of the broader S&P 500. Now, industry watchers say carriers like Delta Air Lines (DAL), Continental Airlines (CAL), American Airlines (AMR), United Airlines (UAUA) and U.S. Airways (LCC: 6.48) may continue to bounce back because they’ll see minimal impact from the volcano in their quarterly results,” Swarts Reports.

As for the broader industry, Henry Harteveldt, a travel industry analyst at Forrester Research, says the timing of the eruption will make it difficult for foreign airlines to recover. “This could not have come at a worse time” for European travel companies, he says, “but the irony is that this may wind up being a good thing for some U.S. carriers.” Prospective travelers to Europe may choose U.S. carriers because they can change their routing to other airports and will have the aircraft to support additional flights if another volcanic interruption closes some airports.

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Here are some details on the Claymore/NYSE Arca Airline ETF  (NYSE: FAA) below:

The investment (FAA) seeks to replicate, net of expenses, the NYSE Arca Global Airline Index. The fund will invest at least 80% of assets in common stocks, ADRs and GDRs that comprise the index. The index is a modified equal-dollar weighted index designed to measure the performance of highly capitalized and liquid US and international passenger airline companies identified as being in the airline industry. The fund is nondiversified.

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