NEW YORK (TheStreet) -- Shares of Southwest Airlines (LUV) are down by 8.09% to $37.60 in mid-afternoon trading on Wednesday, as the airline sector takes a hit due to signs that a year filled with low fuel costs has left airlines positioned to increase competition for customers with cut-rate fares and more routes, Bloomberg reports.
Southwest saw its biggest drop in three years this afternoon, while American Airlines (AAL) is having its worst day since coming out of bankruptcy in 2013.
American Airlines CEO Doug Parker said on Tuesday, that the company plans to "compete aggressively" against discount carries, in an interview with Bloomberg.
Carriers are able to finance expansion projects and offer customers less expensive flights as oil prices remain near $60 per barrel, Bloomberg noted, adding that Southwest led Wednesday's declines following CFO Tammy Romo's comments that the airline upped its 2015 expansion plan to as much as 8%.
Romo said the decision isn't related to fuel savings, which are forecast to be as much as $1.3 billion in 2015, but she did estimate it would take at least two years before new markets generate returns, Bloomberg said.
Additionally, analysts at Buckingham downgraded Southwest to "neutral" from "buy" citing a more cautious revenue outlook for the company amid a worsening competitive backdrop, theflyonthewall.com reports.
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