United Continental Holdings and Delta Air Lines Inc. fell the most in about two months after the World Bank reduced its global growth outlook and Deutsche Lufthansa AG cut its earnings forecast.
United fell 5.2 percent to $45.26 in New York, the biggest drop for the Chicago-based airline since April 24. Atlanta-based Delta fell 2.9 percent to $40.71, its biggest decline since April 10.
A prediction by the World Bank that the global economy would grow by 2.8 percent this year, instead of a previous forecast of 3.2 percent, probably weighed on stocks, Kevin Crissey, an analyst with Skyline Research in Mahwah, New Jersey, said. Stock Indexes in the U.S. and Europe declined.
Adding to the concern, investors probably were spooked by Lufthansa’s warning that operating profit will come to about 1 billion euros ($1.35 billion) in 2014, or as much as 500 million euros less than previously forecast, and 2 billion euros in 2015, or 650 million euros short, two analysts said. Increased competition from Middle Eastern airlines and labor trouble among its pilots also weighed on Koeln, Germany-based Lufthansa.
Neither Crissey nor Bob McAdoo, an analyst at Imperial Capital in Los Angeles, sees the U.S. airline industry facing the same threats from Gulf carriers as Lufthansa and other European airlines. United doesn’t fly routes from Germany or Scotland to India or the Middle East and doesn’t have to worry as much about Etihad Airways PJSC or Emirates stealing customers, McAdoo said.
“Our revenue stream does not appear to be impaired,” McAdoo said. “Our own people are talking about things being just fine from a revenue point of view.”