Sector Snap: Airlines down

DALLAS - Airline stocks fell in morning trading Friday, following the broader market, as a spike in unemployment raised fresh doubts about demand for air traffic and an analyst widened his estimates of losses by the carriers.

Even another drop in oil prices couldn't help airline stocks.

The AMEX airline index fell 3.3 percent, with 11 of its 13 component stocks declining.

Earlier Friday, the Labor Department reported that joblessness rose to 7.2 percent in December, the highest rate in nearly 16 years, raising fears that the economy hasn't yet hit bottom.

Worries about the U.S. and global economies helped push oil prices lower.

Light, sweet crude for February delivery fell $1 to $40.70 a barrel in morning electronic trading on the New York Mercantile Exchange.

Ray Neidl, an airline industry analyst for Calyon Securities, said Friday that airlines have taken tough steps to prepare for a downturn — they cut capacity last year, so they have fewer seats to fill — but that the economy remains their biggest concern.

Neidl widened his estimated fourth-quarter losses for most major U.S. airlines and said the industry would report $4.4 billion in losses for 2008. But he predicted that the industry will turn a $4.9 billion profit next year. He based that forecast on oil at $61.50 a barrel and a slow economic recovery beginning in the second quarter.

Besides worrying about the economy, airline executives are wondering what a new administration and Congress will mean for regulation.

This week, Democratic and Republican leaders of the Senate Judiciary Committee said alliances between U.S. and foreign airlines should be given antitrust immunity only in "extraordinary cases."

Committee Chairman Patrick Leahy, D-Vt., and Republicans chairman of the Senate Judiciary Committee, and Republicans Arlen Specter of Pennsylvania and Orrin Hatch of Utah said such deals could hurt competition and raise prices for consumers.

American Airlines is seeking antitrust immunity for a joint venture with British Airways and Spain's Iberia for trans-Atlantic flights, and Continental Airlines Inc. wants immunity for a deal with United and Germany's Lufthansa on international routes.

Shares of Delta Air Lines Inc., the world's biggest airline operator, fell 34 cents, or 2.8 percent, to $11.88; shares of United Airlines parent UAL Corp. dropped 65 cents, or 5.1 percent, to $12.12; and American Airlines parent AMR Corp. lost 44 cents, or 3.6 percent, to $11.85.

Continental shares tumbled $1.09, or 5.1 percent, to $20.49; Southwest Airlines Co. fell 37 cents, or 4.1 percent, to $8.62; US Airways Group Inc. lost 50 cents, or 5.2 percent, to $9.07; JetBlue Airways Corp. dropped 76 cents, or 9.8 percent, to $6.97; and AirTran Holdings Inc. dropped 29 cents, 6.1 percent, to $4.48.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.