Airline Stocks Under Pressure as Fuel Costs Prompt Price-Target Cuts

Airline shares have slid as persistently high jet fuel prices squeeze earnings. American Airlines fell about 6% on October 14 to near $11.71, down from the mid-$13s in late September, after several brokers lowered their targets.

BMO cut its target to $15.50 from $19, Bank of America to $15 from $17, and Goldman Sachs to $11 from $13 with a Sell rating. Management has warned high fuel prices could add about $1 billion to fourth-quarter costs and may require further capacity cuts.

Delta's earnings miss and fuel-related guidance cut on October 9 pushed the sector lower, and American, United and Southwest are reportedly trimming planned capacity. Third-quarter results will be the next major test.