U.S. airlines see traffic decline in June

* Airline traffic lower in June

* Load factors mostly up

* US Airways blames drop on business travel demand

By Kyle Peterson

CHICAGO, July 7 (Reuters) - U.S. airlines saw steep declines in passenger traffic in June, a sign that travel demand remains weak and that carriers are likely to post second-quarter losses.

Monthly data released in recent days by the carriers, showed UAL Corp's (UAUA.O) United Airlines had the biggest decline in traffic -- 10 percent with capacity down 10.4 percent.

Load factors, a measure of how full an airplane is, were mostly higher because of large-scale airline downsizing in the last year. None of the top nine U.S. airlines reported an increase in traffic for the month. [nN07251708]

"The numbers have just been somewhat disappointing. It just implies that revenues were under pressure," said Helane Becker, airline analyst at Jesup & Lamont Securities.

"We are expecting losses for the group," Becker said. "I'm looking for losses across the board."

U.S. carriers have been punished this year by weak demand as the recession erodes travel budgets.

"These declines in unit revenues are driven by weaker demand for business travel and lower leisure yields as a result of the global economic recession," US Airways Group (LCC.N) president Scott Kirby said in a statement.

Traffic for US Airways fell 4.1 percent on a capacity decline of 6.1 percent. Traffic for AMR Corp's (AMR.N) American Airlines fell 8.1 on a 7.8 percent decline in capacity.

Airline shares were mostly down on Tuesday. The Amex airline index .XAL was down 1.10 percent.

(Reporting by Kyle Peterson; Editing Bernard Orr)