Airline investors want the exact opposite of what consumers want: higher fares.
Several U.S. airlines this week reported better-than-expected profits, but their growth plans have worried some analysts that the skies could be flooded with too many seats, and that airlines will have to offer bargain fares to compete. Their expansion plans are coming just as costs from fuel to labor are rising.
The worries began on Tuesday when United Airlines said it aimed to grow capacity by as much as 6 percent a year for each of the next three years. Shares tumbled more than 11 percent the next day, taking down other airline stocks. A day later, investors still appeared worried about how the sector will grow and how it will withstand higher costs, especially with rising fuel bills.
United shares dropped another 4.3 percent Thursday, while American fell 3.2 percent, Delta Air Lines shed 3.5 percent and Southwest dropped 3.3 percent. JetBlue sank 6.2 percent after an earnings miss.
"I think investors have every right to be worried about that," Raymond James airline analyst Savanthi Syth said of United's pace of growth.