Updated from 2:41 p.m. ESTAirline stocks took another nose dive Monday after a report showed February unit revenue was weaker than expected because carriers are adding too many flights back to their schedules, but that didn't stop brokerages from telling investors with a stomach for risk to buy shares in what they consider an oversold sector. The Air Transport Association said revenue per available seat mile, a key metric called RASM, grew 2.8% in February, missing some Wall Street expectations, which ran as high as 5% growth. The results, released late Friday, are especially disappointing given easy comparisons with last year, when results were lower because of a pair of East Coast blizzards and the run up to the war in Iraq. "RASM fell 2.9% in February of last year vs. 2002 on the eve of the war in Iraq," said Gary Chase, analyst at Lehman Brothers. "Returning capacity is to blame for the industry's revenue woes, in our view. Our fear that industry unit revenue would suffer given significant capacity growth is becoming a rather problematic reality." In reaction to the news, the Amex Airline Index was off 3.4%, led lower by AMR ( AMR), parent of American Airlines, which was off 61 cents, or 5.4%, to $10.77. Indeed, estimates from Goldman Sachs suggest that capacity, a supply metric measured in available seat miles, is outstripping demand. In the fourth quarter, industry revenue increased 4% to 5% while capacity declined 2%, a strong performance that helped boost airline stocks and fueled hopes of a recovery. With capacity up between 4% and 5% in the first quarter, revenue should grow in lockstep, but with RASM coming in below estimates, revenue growth, in fact, appears to have stalled out. The weakness in revenue generated from domestic flights underscores this point. In the domestic market, legacy and low-cost carriers have been adding or restoring flights, filling out their routes and increasing the frequency of service. Sensing an economic recovery this year, legacy carriers are bringing back flights that were shelved last year heading into the war, while low-cost carriers are adding new markets and connecting flights.