An announcement last week from United Airlines (UAL) indicated that all may not be right with the airlines. United explained that currently they are operating under capacity in the US, during what should be the busy summer period. The result is dropping prices. This is not only reflected in ticket prices, but also in the stock prices. To put this into perspective, during the past three months, the major US airline stocks have dropped an average of 11.97 percent!

We started downgrading the major airline stocks at the end of last year when our analysis warned us that they were starting not to be “BUY” stocks. Hopefully you took note of our ratings changes.

United Continental was rated A- in November 2015; it has slipped down to a C by mid. June, 2016.

Delta has been downgraded steadily since May 2016 from a B to a C+ by the beginning of July.

American Airlines has been downgraded since March 2016 from a B+ to a C in June.

All have been HOLDs for months based on our investment ratings and now they’re reporting not so good news.

So who benefits? In the short term, customers are going to be the beneficiaries of cheaper flights. However, in the long-term, if profits fall, so will the value of these investments which may be in your investment portfolios. This would be bad news for a long cohort of people such as airline employees, investors, suppliers, aircraft leasing companies and manufacturers. The assumption is that airline travel is growing and expansion is undiminished. The evidence is telling a different story. Terrorism in France, Brexit and the rising US Dollar have all contributed to a slow down.

Is this the new normal? Or a temporary valley? How are the airlines positioned for all of this uncertainty?

Take a look at our Screener of transportation stocks and see for yourself if an entire sector maybe be out of favor.

And you can always check Weiss Ratings to see the underlying fundamentals of your favorite airline stocks.