By Jack Nicas 

A slight increase in Southwest Airlines Co.'s growth plans fueled a broad selloff in U.S. airline stocks, highlighting investor jitters that cheap fuel could cause carriers to oversupply the market, undoing recent competitive discipline that has helped the industry reach record profits.

Southwest said a day ago that it plans to grow 7% to 8% in 2015, up from its previous 7% estimate.

Analysts also reported on Wednesday that the industry's revenue performance was worse than expected in April.

Shares of Southwest, United Continental Holdings Inc., and American Airlines Group Inc. fell by more than 9% and Delta Air Lines Inc. fell 5.6%.

U.S. airline stocks tend to be very volatile, and investors had bid them up for most of the past year on hopes the companies would continue reaping the benefits of cheap fuel without engaging in the competition that has hurt their financial performance in the past.

That the relatively minor Southwest news items sparked such a broad decline in prices of airline stocks signals how skittish investors still are about the carriers, despite depressed oil prices and forecasts of record profits this year.

Analysts said that while investors are right to be concerned about some airlines' growth plans, Wednesday's selloff was an overreaction, and they remain generally bullish on the industry.

"Investors are taking profits and being cautious, but we think when summer rolls around and airplanes are packed and airlines are back to making record profits, investors will come back," said Jim Corridore, an airline equity analyst with S&P Capital IQ. "It's my fundamental view that the most pervasive thing is energy prices."

The price of jet fuel--until recently airlines' biggest expense--has fallen by a third since August. Many airline executives have said that instead of using fuel savings to fund new growth, they would reduce debt and return cash to shareholders. Indeed, many companies have done that, but growth forecasts have also risen.

"Domestic capacity discipline has effectively vanished," said Wolfe Research airline analyst Hunter Keay. "Marginal routes that would have been eliminated to fund growth of new routes are now being kept."

Cheap fuel is making growth irresistible to airlines, Mr. Keay said. "If you're generating cash flow you never thought you'd generate because oil prices are so low, it's very hard to walk away from earning money," he said. "The true test is walking away when oil prices are low. That's true discipline."

Southwest is the main force, analysts said, with potential 8% growth this year and 7% growth next year, though much of its expansion has come in Dallas, where new rules allow it to fly farther from the secondary airport.

Smaller carriers like JetBlue Airways Corp., Spirit Airlines Inc. and Frontier Airlines are also expanding aggressively, but Southwest's expansion has the biggest impact on overall market supply because it alone controls about a sixth of the U.S. domestic market.

Mr. Keay said Southwest's and others' aggressiveness is pulling bigger rivals like American and United away from their disciplined strategy. In a situation he describes as a Mexican standoff, airlines are afraid "that if they cut, someone else will come in and take that market."

"Capacity is being added, not by us, but by some of our competitors, and we will obviously respond to that," American Airlines Chief Executive Doug Parker said on CNBC on Tuesday.

Mr. Parker added that while he believes oversupply would continue to harm airlines' revenue performance in the near term, he cautioned that the issue wasn't fatal to a financially revamped U.S. airline industry.

"It's nothing like we've seen in the past when you'd see all airlines fighting for share," he said. "These are individual airlines making individual decisions. They're going to have to figure out how to compete with that growth."

Meanwhile, U.S. airlines' unit revenue declined 3.9% in April compared with a year prior, according to UBS AG airline analysts, who had expected a 3% decline.

Write to Jack Nicas at jack.nicas@wsj.com

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