Sector Snap: Airlines shares fall

Airline stocks fell Tuesday, led by the parent of American Airlines, which announced it would issue new stock and debt to build up its cash reserves.

The Amex Airlines Index, which has rallied in the past two weeks, fell 1.3 with 10 of its 13 component stocks lower in late-morning trading.

The broader market gained modestly. The Dow Jones industrial average was up 0.3 percent to over 9,800 as investors waited for the Federal Reserve’s meeting on interest rates.

The Fed isn’t expected to change the current low rates, but it could give a clearer picture of the economic recovery and signal when it might raise rates.

Oil prices rebounded from a dip Monday to rise above $71 on Tuesday, with benchmark crude for October delivery climbing $1.58 to $71.29 per barrel on the New York Mercantile Exchange. Oil benefited from a decline in the dollar.

In late-morning trading, shares of American parent AMR Corp. fell 63 cents, or 7 percent, to $8.40. Late Monday, AMR announced it would issue new stock and convertible debt in a plan to raise more than $500 million.

Airlines are trying to build cash because revenue is down sharply from last year, and they’re heading into the slower fall and winter travel season. Just last week, AMR raised $2.9 billion by selling planes and frequent-flier miles.

Shares of Continental Airlines Inc. dropped 93 cents, or 5.4 percent, to $16.44; United Airlines parent UAL Corp. lost 20 cents, or 2.1 percent, to $9.20; and Delta Air Lines Inc. dipped 7 cents to $9.58.

U.S. Airways Group Inc. fell 16 cents, or 3 percent, to $5.27; JetBlue Airways Corp. dropped 13 cents, or 2 percent, to $6.46; and Southwest Airlines Co. fell 17 cents to $9.60.