Global Airport News
Shares of American Airlines parent AMR and US Airways led a sector rally on Monday, helped by lower oil prices, improving travel demand and a positive analyst outlook.
JP Morgan analysts Jamie Baker and Mark Streeter broadly raised estimates and targets due to the improved operating outlook.
"We suggest investors increase their exposure to airline equities ahead of an expected upward surge in consensus estimates," the two wrote in a note to clients as US oil futures slipped to USD$97.08 a barrel.
Jet fuel has declined 30 cents per gallon since the last week of April, improving the prospects for airlines trying to regain their footing after a difficult first quarter due to fuel price gains.
Shares of AMR closed 4.9 percent higher at USD$6.69 and US Airways gained 5.6 percent, both on the New York Stock Exchange. United Airlines parent United Continental gained 2.2 percent, while shares of Delta Air Lines rose 3.3 percent and Southwest Airlines rose 0.6 percent.
In upgrading AMR to hold from sell, Standard & Poor's analyst Jim Corridore now expects smaller full-year losses from American for this year and 2012.
Corridore revised his 2011 estimate for American to a loss of USD$1.42 a share from USD$2 a share previously. For 2012, he expects a loss of 74 cents a share, compared with a prior view of $1.06.
Avondale Partners analyst Bob McAdoo said receding oil prices would help American Airlines on Wall Street, but he stressed the company still faces management, operating and staff cost problems.
"Moving funds from AMR to any other legacy airline is our recommendation," McAdoo wrote in a note to clients.
While oil prices keep sliding, air travel demand continues to rebound, although it is still off pre-recession highs of 2007 and 2008.
Separately, the Air Transport Association estimates US airlines will fly 206 million passengers between June and August, a 1.5 percent increase over last year.
The industry trade group also said people are booking international flights in record numbers, reflecting an improving economy.