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Airline stocks down after Ebola patient update

Airline shares fell sharply after the CDC and Frontier Airlines said they were searching for 132 passengers who flew with the latest Texas Ebola patient earlier this week.

Airline stock declined largely since the Ebola crisis expanded to the U.S. last month on fears that the spread of the virus will spark lower travel demand.

The second health-care worker who tested positive for Ebola flew on a Frontier Airlines flight the day before she reported symptoms.
NBC
The second health-care worker who tested positive for Ebola flew on a Frontier Airlines flight the day before she reported symptoms.

"We think the fears [surrounding Ebola] are overblown in relation to airline shares because no one has caught the virus from flowing on an aircraft," says Jim Corridore of S&P Capital IQ. "We're seeing drops in stocks that don't even fly internationally... it's a selloff that's feeding on itself," he added, pointing to JetBlue, Spirit and Southwest as examples.

There's a possibility of a dip in demand and possible flight restrictions to certain countries, but it all based on fears, Corridore said.

Read MoreEbola worries fan flight-to-safety trade

Travel to Ebola-stricken areas make up a small part of airline revenue, but the industry could see significant losses if the outbreak widens and causes passengers to stop booking, or start canceling flights.

"That would hurt, but it will be 3 to 6 month thing...Overall, the long-term industry outlook it good," Corridore said, pointing to lower energy prices and its positive impact on jet fuel prices.

Earlier this week, Art Hogan, chief market strategist Wunderlich Securities, said travel stocks will "unfortunately be caught up in speculation and daily headlines surrounding Ebola," which will knock confidence in the industry."

The NYSE Arca Airline index, Dow Jones Transportation Average and the SPDR S&P Transportation ETF accelerated losses after the news broke. The averages were last trading lower.

United Continental, American Airlines and Republic Airways were among the biggest losers in the industry.

Initially higher, JetBlue fell around 2 percent while Ryanair lost about 3 percent after the report surfaced.