US airline investors worry the travel boom may be coming in for a landing

It should be the best of times for US airlines with a travel boom still going strong, but investors are nervous demand may soften as the economy falters, making it harder to protect profits from soaring costs. Those concerns are battering airline stocks even as earnings reports point to a continuing consumer appetite for travel. Shares of United Airlines fell about 10% on Wednesday, dragging down the broader the NYSE Arca Airline index, after the Chicago-based carrier forecast lower-than-expected Q4 profit on rising expenses. "It's really a demand-driven business" said Brian Mulberry, client portfolio manager at Zacks Investment Management. "If there's less demand, then obviously less sales means less profitability." A struggle to get control of operating costs has also called into question rival Delta's goal of generating profit of over $7 per share next year, with some analysts now calling the target aspirational. That is a reason why the airline's shares are down 10% this month even after it posted stronger-than-expected quarterly earnings.<br/>Strong demand from travelers has so far allowed carriers to mitigate inflationary pressure with higher fares. While both United and Delta said travel demand is holding up, double-digit declines in airfares year-over-year suggest airline pricing power has peaked. Falling ticket prices are raising questions as to how airlines will hedge against cost increases. Delta CEO Ed Bastian last week suggested the industry would be able to pass along increased operating costs to consumers.<br/>