Airline stocks jump on fall in oil price

CHICAGO (Reuters) - Airline shares defied the broader stock market on Friday vaulting higher as the price of oil, which influences the price of jet fuel, tumbled nearly 6 percent.

Shares of United Airlines parent UAL Corp (UAUA.O: Quote, Profile, Research) led the rally, gaining 8.04 percent to $5.78 on Nasdaq. American Airlines parent AMR Corp (AMR.N: Quote, Profile, Research) was up 7.8 percent at $7.19 on the New York Stock Exchange.

The Amex airline index .XAL gained 2.59 percent, but the Dow Jones industrial average .DJI fell nearly 3 percent.

Meanwhile, the price of crude oil CLc1 fell 6.03 percent at $81.37. For months, airline stocks moved opposite oil prices. That relationship weakened this summer, however, as capacity cuts and broader economic weakness began to play a larger role in the industry.

"Looks like it's finally reattached itself to changes in oil price movement," said Ray Neidl, airline analyst at Calyon Securities. "I take that as a slight positive because oil prices are moving down."

The airline industry has been severely battered this year by high fuel prices. As a result, carriers are rapidly downsizing to offset that expense.

(Reporting by Kyle Peterson, editing by Dave Zimmerman)