Airline shares extend losses as oil rallies
CHICAGO (Reuters) - Airline shares fell on Wednesday as the price of oil, which directly impacts jet fuel costs, gained 4 percent as the escalating violence in Libya threatened oil production.
The Arca airline index .XAL shed 4.4 percent. Shares of United Continental Holdings (UAL.N) plummeted 10.7 percent to $21.82 in early afternoon trading on the New York Stock Exchange.
Shares of Delta Air Lines (DAL.N) fell 3.2 percent to $10.40, while AMR Corp's AMR.N stock fell 6.7 percent to $6.55.
U.S. light sweet crude oil was up 4.4 percent at $99.82 per barrel.
The airline industry is struggling to recover from a downturn in the last decade. Most recently, carriers were battered by soaring fuel costs and an economic recession that weakened travel demand.
U.S. airlines offset some of those hardships with mergers and steep capacity cuts that enabled them to fly fewer planes but sell more seats on them.
In a speech in Tokyo, Giovanni Bisignani, director general of the International Air Transport Association, said rising oil prices challenge the recovery of the industry.
"Airlines face the challenge of recovering $1.6 billion in added costs for every dollar that the price (of oil) increases," Bisignani said in prepared remarks.
(Reporting by Kyle Peterson; Editing by Tim Dobbyn)