This story was updated at 1:18 p.m. with early afternoon share prices.

A top airline analyst downgraded three major airline stocks, saying consensus forecasts are unachievable given weak domestic pricing impending fourth-quarter disappointments.

In a report issued Friday, JPMorgan analyst Jamie Baker said the weak pricing represents a "self-inflicted [wound] unrelated to capacity, given that the lowest fares are in markets exhibiting the tightest supply."

Like others, Baker cited the fare war between United Continental Holdings Inc. (UAL) and Spirit Airlines Co. (SAVE) as the prime factor in weak pricing.

Baker downgraded United and Spirit, as well as American Airlines Group Inc. (AAL) to neutral from overweight.

He sharply cut fourth-quarter earnings estimates: United goes to 64 cents from $1.75 a share; Spirit goes to 34 cents from 75 cents; American goes to 56 cents from 98 cents.

Baker also upgraded Southwest Airlines Co. to overweight. Southwest is the only major airline stock to show a gain this year.

In early afternoon trading Friday,  United shares were down about 2% while Spirit was down 3% and American was down 0.48%. Southwest was flat.

In a report, Baker said, "Consensus estimates appear increasingly unachievable to us given current fuel [pricing] and the lack of any apparent vigor in shoring up domestic pricing weakness."

Current estimates appear to imply that revenue per available seat mile will be higher in the low-travel fourth quarter than in the high-travel current quarter, "a phenomenon rarely witnessed at the industry level," Baker said.

"While stocks have corrected meaningfully since last earnings season, we fear they may not be braced for the magnitude of Q4 disappointment we anticipate," he said.

Despite the overall dour outlook, Baker said Alaska Air Group Inc. (ALK) , Delta Air Lines Inc. (DAL) , JetBlue Airways Corp. (JBLU) and Southwest "look attractive in our view."

Baker said pricing deteriorated as the third quarter wore on and "the lowest fares are in some of the biggest business markets." Yet estimates including Baker's continue to generally assume improved unit revenue in the fourth quarter.

For instance, Baker said, his earlier United forecast had more than 500 basis points of outperformance relative to the seven-year aggregate decline of 350 basis points. But the outcome is now "difficult to envision," Baker said: United recently reduced third quarter unit revenue guidance, citing competition with ultra-low-cost carriers and Pacific weakness.

Baker now estimates United's fourth-quarter profit at 64 cents a share; consensus is $1.41. He estimates fourth-quarter profit of 34 cents at Spirit; consensus is 60 cents.

Baker also slashed 2018 estimates within a range between an 8% decline at Southwest and a 33% decline at United and Spirit. He slashed his 2018 industry passenger revenue per available seat mile estimate to 0.9% from 2.1%, industry margins by 210 basis points to 13.1% and pretax profits by $4 billion.

Baker noted that he recently upgraded Spirit to overweight, relying on his "Down 30 in 30" formula that anticipates recoveries from steep drops.

"But since the time of our upgrade, Spirit management has shown little interest in making course corrections, in our view, and has continued to expand sub-$20 fares even in the hours leading up to its recent earnings warning," he wrote.

"We can't emphasize enough that managements are capable of fixing pricing -- we continue to pour over fare filings in hopes of identifying evidence of renewed domestic pricing vigor," Baker said.

"We haven't found it yet," he concluded.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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