October 15, 2014 / 5:58 PM / in 3 years

U.S. airline stocks fall on renewed fears of Ebola effect on travel

People make their way at the international arrival terminal at JFK airport in New York October 11, 2014. REUTERS/Eduardo Munoz

NEW YORK (Reuters) - U.S. airline stocks tumbled again on Wednesday on renewed fears of a drop-off in air travel spurred by reports that a second Texas nurse had contracted the deadly Ebola virus and traveled on a U.S. airline flight.

Shares of United Continental Holdings Inc (UAL.N) were down 7.1 percent $40.12 in mid-day trading on the New York Stock Exchange. Airlines American Airlines Group (AAL.O) shares were down 6.25 percent at $29.54. Delta Air Lines Inc (DAL.N) shares were down 4.5 percent at $31.30. JetBlue Airways Corp (JBLU.O) was down 3.8 percent at $9.84.

The shares also fell sharply on Monday on similar concerns about the potential spread of the disease from West Africa. The first person diagnosed with Ebola in the United States, Thomas Eric Duncan, died at a Dallas hospital on Oct. 8. A nurse who cared for Duncan was diagnosed with the disease on Sunday.

On Wednesday, a second nurse involved in Duncan’s care tested positive for the disease and had traveled by air the day before she reported symptoms.

The worker at Texas Health Presbyterian Hospital in Dallas took a Frontier Airlines flight from Cleveland, Ohio, to Dallas/Fort Worth International Airport on Monday, U.S health and airline officials said. Frontier, based in Denver, was acquired from Republic Airways Holdings RJET.O last year by private equity firm Indigo Partners LLC.

Holiday travel data through Oct. 5 show bookings are on par with last year, UBS analyst Darryl Genovesi. He and other analysts said U.S. airline shares could make gains in the fourth quarter, helped by lower fuel prices.

Some said holiday travel was likely to remain solid, despite disease concerns. “In the fourth quarter, people generally go home for Christmas,” said Helane Becker, an analyst at Cowen and Co.

“I really doubt that Ebola is a threat to airline earnings in the fourth quarter,” said Michael Derchin, an analyst at CRT Capital Group. With jet fuel prices lower than in the third quarter, he said, “I would be shocked if earnings were not a lot higher. I would be very surprised if there was any meaningful impact on air travel from Ebola.”

But bookings could fall if Ebola fears mount. “It is certainly possible that demand has deteriorated over the past 10 days,” Genovesi said.

Reporting by Jeffrey Dastin; Editing by Alwyn Scott and Cynthia Osterman

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