Southwest, United, and Other Airline Stocks Fall. A New Fear Is Emerging.

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Airline stocks were lower ahead of the open Wednesday as several major carriers warned of rising fuel costs.

It is clear that the third quarter will be extremely difficult and even record for the airline industry. But investors now have another reason to be concerned about the sector, especially as Labor Day marks the unofficial end of the winter peak travel season.

Southwest Airlines

( LUV ) was the sharpest decliner, falling 4.3% after cutting its outlook for the third quarter. The low-cost carrier will see revenue per seat mile fall between 5% and 7% year over year, down from the previous range of 3% to 7%.

The airline expects fuel prices to be between $2.70 and $2.80 per gallon now, down from an earlier estimate of $2.55 to $2.65. Southwest added that the Labor Day holiday weekend was a record for revenue performance as travel demand was strong. It is still awaiting third quarter operating income.

United Airlines

(UAL) has issued a warning on fuel costs, saying jet fuel prices have increased by more than 20 percent since mid-July. He raised his estimate for gas prices to between $2.95 and $3.05 a gallon–from $2.50 to $2.80 previously.

However, United stuck to its second-quarter revenue in July’s revenue and expense guidance, reflecting a strong performance in the current quarter. However, the stock was 1.4% lower in premarket trading.

Alaska Air

High fuel costs have been reduced from 10% to 12%, from 14% to 16%, seeing a 10% to 12% pre-tax margin, high fuel costs will hit the margin. It also narrowed its revenue guidance, now expecting revenue to rise between 1% and 2% year-over-year, down from 0% to 3% previously, citing canceled flights due to wildfires in Maui.

The warnings affected overall sentiment for airline stocks.

Delta Air Lines

(DAL), down 1.2%;

American Airlines

(AAL) was 0.8% lower. Both airlines have yet to update on third-quarter guidance.

Write to Callum Keown at [email protected]