Sector Snap: Airlines down despite oil dip

Airlines down despite oil dip; American Airlines parent down; US Air to cut about 1,000 jobs

• On 3:21 pm EDT, Wednesday October 28, 2009

NEW YORK (AP) -- AMR Corp. was among the biggest decliners among airline stocks Wednesday after the parent of American Airlines said it will close a maintenance hub and cut hundreds more workers.

Shares were down across the entire sector along with the broader market, despite a decline in oil prices.

The carrier will close a maintenance base in Kansas City, Mo., and shrink other repair shops next September as the ongoing travel slump leaves fewer planes to maintain.

The moves will mean the reduction of up to 700 more workers nationwide, about 5 percent of American's maintenance work force, the company said Wednesday. Its stock lost 44 cents, or 7.5 percent, to $5.46 in afternoon trading. It has traded between $2.40 and $12.47 over the past year.

Elsewhere, US Airways said it will cut about 1,000 jobs next year, shift nearly all of its flying to its three hubs and Washington, and suspend several international routes. Chairman and CEO Doug Parker said he hopes it gets the airline making money again. In afternoon trading, US Airways shares traded up a penny at $3.15.

Delta Air Lines Inc. lost 40 cents, or 5.2 percent, to $7.24. Southwest Airlines Co. was down 12 cents at $8.53 and Continental Airlines Inc. sank 68 cents, or 5.5 percent, to $11.68. United Airlines parent UAL Corp. lost 26 cents, or 3.9 percent, to $6.39.

By mid-afternoon, benchmark crude for December delivery fell $2.02 to $77.53 a barrel on the New York Mercantile Exchange. Oil prices are closely watched by airline investors because jet fuel is one of the industry's biggest expenses.

Meanwhile, UBS analyst Kevin Crissey he is seeing more indications that demand is improving and airlines are able to raise prices. He predicts the group's stock prices will improve when the industry is better able to raise fares next year.

Buzz up!