Sector Snap: Airlines shares drop

Continental Airlines Inc. was the biggest decliner among the big carriers, down 60 cents, or almost 6 percent, to $9.49 in early afternoon trading. United Airlines parent UAL Corp. fell 23 cents, or 4.2 percent, to $5.22, and US Airways Group Inc. fell 11 cents, or 3.8 percent, to $2.76.

United and US Airways both report quarterly financial results on Tuesday.

Oil prices traded up 31 cents to $129.19 a barrel in electronic trading on the New York Mercantile Exchange at midday. Airline shares had rallied last week as oil prices recorded their largest weekly drop ever, leaving behind the $147 peak they reached the week before.

The larger impact on airline shares on Monday may have been a new survey by the International Air Transport Association suggesting that airline executives have lowered their outlook for the industry's profitability over the next year.

IATA said its July poll of executives at 230 airlines showed that about 70 percent of respondents expect smaller profits in the next 12 months, while only 10 percent expect profits to improve.

IATA said high fuel prices remain the top worry among airline executives. Others fear that slumping demand could make it harder for airlines to raise fares and fees to offset high fuel prices.

Elsewhere in the sector, American Airlines parent AMR Corp. fell 17 cents, or 2.4 percent, to $6.96. Delta Air Lines Inc. and Northwest Airlines Corp. were both nearly flat, with Delta falling 4 cents to $6.89 and Northwest falling 5 cents to $8.13.