Airline shares fall as UAL forecast disappoints

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NEW YORK (Global Markets) - Shares of United Continental Holdings Inc (UAL.N) and other airlines fell in midday trading on Friday after the parent of United Air Lines and Continental Airlines forecast second-quarter revenue below Wall Street expectations.

UAL shares were down $2.30, or 9.2 percent, at $22.83 on the New York Stock Exchange.

The NYSEArca Airline Index .XAL, a broad measure of the sector, was down 2.7 percent. Delta Air Lines (DAL.N) lost 6.3 percent and U.S. Airways Group (LCC.N) fell 4.7 percent.

UAL said in a regulatory filing on Thursday that consolidated passenger revenue per available seat mile would rise between 8.3 percent and 9.3 percent in the second quarter. Analysts were expecting a double-digit increase.

UAL cited the impact of a transatlantic joint venture revenue-sharing agreement, and other items, but said demand was consistent with its expectation for a slow, steady recovery.

UBS analysts cut their price target on UAL shares to $36 from $39, saying estimates for second-quarter earnings per share were about 30 cents too high.

Analysts, on average, estimate UAL will earn $1.54 per share in the quarter. The average estimate was about 6 cents higher a month ago, according to Thomson Global Markets I/B/E/S.

Airlines report unit revenue to enable direct comparisons between carriers of varying sizes, a UAL spokesman said.

AMR Corp (AMR.N), parent of American Airlines, on Friday forecast second-quarter consolidated unit revenue will increase between 4.5 percent and 5.5 percent year-over-year. AMR shares (AMR.N) fell 5.6 percent.

Earlier this month, the trade group that represents most global airlines slashed its full-year industry profit forecast by more than half. The International Air Transport Association cited high oil prices and turmoil in Japan. [ID:nL3E7H605H]

(Reporting by Nick Zieminski, editing by Gerald E. McCormick and John Wallace)