Sector snap: Airline stocks fall amid oil woes

The Amex Airline Index sank 2.3 percent to 17.83. The broader market likewise turned lower, with the Dow Jones industrial average falling 0.5 percent to 12,100.87.

Oil prices continued to ease, but nonetheless remained within range of record highs. Light, sweet crude for July delivery fell $1.48 to $132.53 a barrel on the New York Mercantile Exchange.

Airline shares are sensitive to movements in the energy market because fuel now accounts for most airlines' biggest expense.

Those concerns were underscored earlier in the day when the head of Airbus parent EADS warned that high oil prices are unlikely to fall significantly, and that the entire industry would have to adapt.

"The increase in oil prices is forcing us to reflect on what the air transport of tomorrow will look like," Chief Executive Louis Gallois said.

Southwest Airlines Co., which thanks to highly coveted fuel hedges is in better financial shape than many carriers, said it plans to grow modestly through next year but is prepared to halt those expansion plans if oil prices and the economy do not cooperate.

Southwest shares fell 12 cents to $14.18.

On Tuesday, Northwest Airlines Corp. and Air Canada joined the ranks of major carriers announcing sweeping capacity cutbacks in response to rising fuel prices. Each of the two carriers said they were prepared to cut even deeper should the need arise.

Northwest shares fell 29 cents, or 4.3 percent, to $6.49.