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Airlines close books on tough summer

NEW YORK (AP) -- U.S airlines are closing the books on a summer quarter that never quite got off the ground.

Demand in the last three months, which included the bulk of the peak vacation season, inched along as travelers grew more nervous about the health of the economy.

The International Air Transport Association said Friday that demand among North American airlines in August grew just a half-percent from both July and August of last year.

Summer is normally one of the strongest periods of the year for airlines. The stocks of all major carriers lost ground in the quarter, several by double-digit percentages.

United Continental Holdings Inc.'s stock has slipped the most among major airlines as disruptions from the blending of United and Continental's operational systems hurt the company's revenue and bookings. Its shares are down about 20 percent for the quarter.

At least two analysts cut their earnings estimates for United Continental Holdings on Friday, following the company's announcement that passenger revenue per available seat mile dropped between 1 and 2 percent in the third quarter. That measures the money an airline makes to fly a passenger a single mile, and is a key indication of the airlines' ability to raise fares.

Despite a tough summer, though, most airline stocks have gained ground so far this year. And keeping a lid on expansion has also helped their bottom lines. By cutting back the number of available seats, or capacity, most airlines have been able to hold up ticket prices.

The IATA said it believes that sluggish economic growth in the U.S., the debt crisis in Europe and continued worries about a slowdown in China are taking their toll. But airlines should be able to continue to hold up their earnings through capacity cuts and other cost reductions, it said.

Airline shares on Friday fluctuated along with the price of oil. As the quarter drew to a close, Delta Air Lines Inc. was down about 17 percent for the period, while US Airways Group shed about 20 percent. Southwest Airlines Co. slipped about 3 percent in the quarter and JetBlue Airways Corp. was down about 8 percent.