The numbers cuts in the airlines are brutal and each time they are made and someone downgrades the stocks, like Jefferies today, they will fall some more. This is the way of low-multiple stocks when it turns out the earnings estimates are too high.
I have always found this kind of moment so painful because people who have not experienced the multiple contraction that is a precursor to number cuts keep trying to call the bottom in the group.
There can be no bottom until the cuts are over and I could argue that they have just begun. There are, for example, nine Buys and six Holds on American Airlines (AAL). That may seem like a decent place if you are a long, but every time the numbers come down, the analysts who are recommending the stocks get cold feet because the stocks are up so much and they don't want to give up the gains.
Oh, and let's be sure, this is the entire group. At various times some will fall less hard. Spirit (SPR) is the airline that has the least pressure on it, as it has routes over which fewer fight. American has the most because people feel that it is most vulnerable to new capacity.
Now, I think in the end the group will show that it has more earnings power than people think. These companies are not going to start losing money. But it doesn't matter, as investors are always drawn to low-multiple stocks. I just need to remind you that low-multiple stocks where the estimates are coming down cannot, per se, be a bargain.