NEW YORK (AP) â¿¿ A Citi analyst downgraded two airline stocks on Monday citing a likely slide in revenue, slower-than-expected global economic growth and reports of some tightening corporate travel budgets. Analyst Will Randow cut his rating on US Airways Group Inc. to "Sell" from "Hold" and United Continental Holdings Inc. to "Hold" from "Buy." He said he expects airlines will report revenue fell in late September and corporations tightened the travel pursestrings amid weakening consumer confidence and high unemployment. Airline revenue tends to track confidence and job report numbers because travel is a discretionary expense. Consumers are reluctant to spend with unemployment high, wages stagnant and gas prices at about $3.50 a gallon. Consumer confidence fell to recessionary levels in August, after lawmakers battled over raising the government's borrowing limit and Standard & Poor's cut its rating on long-term U.S. debt. Retail sales were also flat in August, a sign the turmoil caused consumers to pull back. Randow said he thinks airlines' plans to reduce flying should cushion the blow of any consumer pullback, but large network airlines still face stubbornly high costs and lower fuel efficiency than their low-cost competitors. He recommends investors buy shares of Alaska Air Group Inc., Spirit Airlines Inc. and Southwest Airlines Co. Airline stocks were led lower Monday by American Airlines parent company AMR Corp., which lost 9 percent, or 26 cents, to $2.70. Delta Airlines Inc. was the next-largest decliner, falling 38 cents, or 5 percent, to $7.12. United Continential fell 92 cents, or 4.8 percent, to $18.46. U.S. Airways fell 16 cents, or 2.9 percent, to $5.34. Most other airline stocks lost about 2 percent.
More from Opinion
Adobe: Take Advantage of Bearishness to Buy a High-Quality Stock Cheaper
Valued at a reasonable P/E of about 35, Adobe looks like a compelling growth stock to own at current levels -- especially if post-earnings bearishness takes hold during the Wednesday trading session.
Schlumberger's Bull Case Gets Stronger With Saudi Oil Attacks
The oil supply disruption caused by the recent attacks in Saudi Arabia adds to a recovering international energy production environment and low valuations that make Schlumberger worth considering.
Why It's a Good Time to Consider Dividend-Paying Stocks
Mark Hulbert notes dividend-stock strategies may be out of favor, but these days, they can provide not only a higher yield but also growth potential.
Google Ordered by NLRB to Allow Employees to Speak Their Minds
Two employees were reprimanded and one terminated, one for posting negative comments on social media about management, the other allegedly for posting Republican views on a company message board.