Airline stocks rally as oil prices retreat

CHICAGO (Reuters) - U.S. airline shares were broadly higher on Thursday as oil prices -- directly linked to the price of jet fuel -- retreated from a record high above $135 a barrel.

American Airlines parent AMR Corp (AMR.N: Quote, Profile, Research, Stock Buzz) posted the sharpest gain, rallying more than 9 percent. AMR's jump outpaced a 3 percent rise in the Amex airline index .XAL. Nymex crude oil CLc1 was down 96 cents to $132.21 a barrel.

Standard & Poor's equity analyst Jim Corridore said the jump in airline shares was simply a rebound on the heels of Wednesday's sell-off.

The pain in the airline industry was underscored on Wednesday by news that American Airlines would cut domestic capacity by as much as 12 percent and begin charging a $15 fee to check a single bag.

"I think they're pulling all the levers they can," Corridore said. "They are sending a message to consumers that things are dire, and I do think that consumers need to get that message."

AMR shares were up 9.16 percent at $6.79 on the New York Stock Exchange. Shares of United Airlines parent UAL Corp (UAUA.O: Quote, Profile, Research, Stock Buzz) were up 4.29 percent to $8.50 on Nasdaq. Delta Air Lines (DAL.N: Quote, Profile, Research, Stock Buzz) shares were up 4.33 percent at $6.02 on the NYSE.

(Reporting by Kyle Peterson; editing by John Wallace)