Sector Snap: Airlines trade mixed as oil rises

The Amex Airline Index slipped 0.7 percent to 17.54 in early afternoon trading, with eight of its 14 component stocks trading down.

Investors' uncertainty was reflected in the broader market as well. The Dow Jones industrial average dipped 0.5 percent to 12,248.08, but the Nasdaq gained 0.2 percent to 2459.64.

Oil prices continued to batter the struggling airline sector, rising at one point to a new record near $140 a barrel. Light, sweet crude for July delivery soared to a trading record of $139.89 before retreating to trade up $2.10 at $136.96 a barrel on the New York Mercantile Exchange.

Airline stocks often move opposite oil prices because fuel represents most carriers' biggest expense.

Hardest hit were shares of budget airlines. AirTran Holdings Inc. dropped 10 cents, or 3.6 percent, to $2.65, while Southwest Airlines Co. tumbled 48 cents, or 3.4 percent, to $13.82. JetBlue Airways Corp. fell 9 cents to $3.80.

Among legacy carriers, decliners included UAL Corp.'s United Airlines, down 8 cents to $6.78.

However, investors rallied around some network carriers that have taken recent steps to shore up their slumping balance sheets.

US Airways Group Inc. shares soared for the second straight session after the Tempe, Ariz.-based carrier last week said it would slash capacity and jobs, and start charging for drinks and a first checked bag. Its shares rose 12 cents, or 4.2 percent, to $2.98.

Other gainers included Continental Airlines Inc., up 8 cents to $13.58, and Delta Air Lines Inc., up 3 cents to $5.35.