Airline shares fall amid $130 oil

NEW YORK (Reuters) - Shares of major U.S. airlines fell on Wednesday amid record oil prices, a brokerage downgrade and a capacity cut by American Airlines.

Oil prices touched a record high above $130 a barrel on Wednesday.

The Soleil brokerage cut the U.S. airlines sector to neutral from outperform, according to theflyonthewall.com, which tracks analyst ratings.

Shares of Continental Airlines (CAL.N: Quote, Profile, Research, Stock Buzz) fell about 8 percent to $15.08 and United Airlines parent UAL Corp (UAUA.O: Quote, Profile, Research, Stock Buzz) dropped 11 percent to $10.27.

Shares of AMR Corp (AMR.N: Quote, Profile, Research, Stock Buzz), parent of American Airlines, were down 13 percent to $7.18.

American Airlines said on Wednesday it plans to cut domestic capacity by 11 percent to 12 percent this year, which would be the largest for the airline since the drastic scaling back of air travel after the attacks of September 11, 2001.

US Airways Group (LCC.N: Quote, Profile, Research, Stock Buzz) fell more than 9 percent to $6.23, Alaska Air Group (ALK.N: Quote, Profile, Research, Stock Buzz) was down about 4 percent at $19.73, Delta Air Lines (DAL.N: Quote, Profile, Research, Stock Buzz) fell about 5 percent to $6.55 and Northwest Airlines (NWA.N: Quote, Profile, Research, Stock Buzz) was down about 5 percent at $7.32.

The Amex airline index .XAL fell about 4.5 percent.

(Reporting by Mark McSherry; Editing by Derek Caney)