Sector Snap: Airlines shares drop

Airline shares gave up some of their recent gains on Thursday amid broad stock market declines and a slight rebound in the price of oil.

The day featured a better-than-expected profit at Southwest Airlines Co. and debt downgrades at US Airways and JetBlue.

The Amex Airline Index fell 3.2 percent to 21.87 in late morning trading. It is still well above a low of around 17 at the end of Monday. Airline shares have rallied since then on a cash infusion at United Airlines parent UAL Corp. and falling oil prices.

Network carriers were down much more on Thursday, though, with Delta Air Lines Inc. down 9.5 percent to $7.78 and planned buyout partner Northwest Airlines Corp. down 9.2 percent to $9.50. UAL Corp.'s United Airlines fell 7.2 percent to $8.68.

Oil prices, which are now the single largest expense at most airlines, floated below $125 a barrel after an earlier move higher. Oil had dropped sharply on Wednesday, tumbling $3.98 to settle at $124.44 a barrel, its lowest finish since June 4. Crude is now trading nearly 15 percent below its peak above $147 a barrel earlier in July.

Southwest Airlines reported a profit that beat Wall Street expectations _ $121 million, not counting special items. But the growth-oriented airline said it might not grow at all next year.

Also on Wednesday, Moody's Investors Service downgraded the debt of US Airways Group Inc. and JetBlue Airways Corp. further into junk territory and said the outlook for both carriers was negative.

However, those carriers appeared to suffer less than others, with US Airways down 3.2 percent to $4.90 and JetBlue down 3.8 percent to $5.05.

American parent AMR Corp. fell 55 cents, or 5.8 percent, to $9 and Continental Airlines Inc. fell 91 cents, or 6.2 percent, to $13.89. Southwest Airlines fell 36 cents, or 2.3 percent, to $15.52.