Airline shares tumble on weak outlook for travel

CHICAGO (Reuters) - U.S. airline shares were down sharply on Wednesday, with US Airways Group (LCC.N) and United Airlines parent UAL Corp (UAUA.O) posting the largest percentage declines, on concerns about weak travel demand.

The share drop followed the broader stock market as the Dow Jones industrial average shed 3.25 percent and the Nasdaq composite index lost 2.56 percent. The Amex airline index .XAL was down 11.27 percent in late-morning trade.

"People are very nervous about (travel) demand going forward," Calyon Securities analyst Ray Neidl said.

The airline industry is bracing for a decline in demand as severe economic weakness threatens to erode travel budgets.

UAL was down 20 percent at $10.26 on Nasdaq. US Airways was down 18.91 percent at $6.09 on the New York Stock Exchange.

AMR Corp (AMR.N), parent of American Airlines, was down 15.31 percent at $7.08 on the New York Stock Exchange. Delta Air Lines (DAL.N) was down 16.29 percent at $7.40 on NYSE.

(Reporting by Kyle Peterson; editing by John Wallace)