Airline shares are plunging after United forecast raises price-war concerns
A United Airlines airplane passes the skyline of lower Manhattan and One World Trade Center as it heads to a runway at Newark Liberty Airport on January 20, 2018 in Newark, New Jersey.

Airline stocks fell Wednesday after United Continental's growth plans raised concern it could drive down fares.

Shares of United pulled back 11.4 percent, the biggest decliner in the S&P 500. American Airlines declined 6 percent, while Delta Air Lines fell 5.2 percent and Southwest Airlines dropped 4.7 percent.

United said it expects to increase annual capacity by 4 percent to 6 percent through 2020. This move could squeeze United's profit margins because it could lead other airlines down a similar path, forcing a drop in fares.

"We definitely understand management's decision to focus on improving their domestic network as the company admittedly shrunk too much post the Continental merger, but that was almost a decade ago and investors are likely to be somewhat frustrated by the company's aggressive growth rate," Cowen analyst Helane Becker said in a note Wednesday.

"The stock is unlikely to reflect the company's potential in the near-term as we anticipate competitive actions and investor concerns regarding overcapacity," Becker said.

United also said it expected full-year earnings per share to range $6.50 to $8.50. Analysts polled by StreetAccount expected guidance of $6.99 per share.

—CNBC's Leslie Josephs contributed to this report.