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Airline stocks drop as demand falls

Continental Airlines Inc. and American Airlines parent AMR Corp were among the major casualties as stocks dropped among U.S. carriers after February data showed fares and travel demand in serious decline. Continental tumbled 17 percent, the most since October, and AMR fell to the lowest since April 2003 with suggestions that the industry may be forced to cut seating capacity further because the collapse in demand may erase gains from lower fuel prices.

Continental Airlines said passenger traffic on those routes fell 10.3% last month compared with a year earlier, but capacity was down just 4.7%.

Southwest Airlines Co. also warned that it was being more “cautious” about its full-year revenue outlook, citing the decline in business passengers already evident on international routes.