2 Big Brokerages Reduce Ratings on Airline Stocks

Two prominent investment houses cut their ratings on airline stocks Thursday, prompting a broad selloff in the group, which has been soaring on feverish takeover speculation.

An official at Goldman, Sachs & Co. said the firm told clients that it had cut 1989 earnings estimates for airlines, saying also that its 1990 projections may be too high.

Separately, Salomon Bros. analyst Julius Maldutis said his firm had downgraded ratings on almost all airline issues, including AMR Corp., parent of American Airlines, USAir Group Inc. and Air Canada.

AMR fell $4.375 to $82.625, USAir lost $1.625 to $48.375 and Delta Air Lines Inc. dropped $4.25 to $75.25.

Traders said profit taking also hit the stocks following their sharp rise on takeover speculation during the summer. A pullback by some carriers on previously announced fare increases may also have hurt the stocks.

Airline stocks have shot almost straight up since March, when investor Marvin Davis proposed a takeover of NWA Inc., the parent of Northwest Airlines, which was eventually sold to a competing bidder.

Airline issues were bolstered again last month when Davis opened the bidding for UAL Corp., which owns United Airlines, the second-largest U.S. carrier after American.

A management-labor group at United has offered $300 a share, or $6.75 billion, for UAL, topping Davis’ $275-a-share offer.