Sector Snap: Airlines shares rise

posted: 42 DAYS 11 HOURS AGO

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NEW YORK -Shares of the largest U.S. airlines rose Wednesday, helped by a rally in the broader market that pushed the Dow close to 10,000.

The Dow Jones industrial average rose more than 110 points in afternoon trading, as investors were cheered by strong earnings reports from Intel Corp. and JPMorgan Chase & Co.

The first third-quarter report from a major airline will come Thursday, when Southwest Airlines Co. releases financial results before the start of trading.

Recently, airlines have strengthened their balance sheets by raising cash, sometimes issuing new stock that reduced the value of existing shares. Despite that dilution, airlines still offer "compelling risk-reward," Barclays Capital analyst Gary Chase said Wednesday in a note to clients.

Chase upgraded American Airlines parent AMR Corp. to "overweight" from "neutral," raised Continental Airlines Inc. to "neutral" from "underweight," while downgrading JetBlue Airways Corp. to "neutral" from "overweight" and AirTran Holdings Inc. to "underweight" from "neutral."

In a cautionary note for airlines, however, oil prices jumped to new highs for the year, partly on the belief that demand will strengthen as the holiday season nears.

Benchmark crude for November delivery rose 78 cents to $74.93 a barrel after rising as high as $75.40 earlier in the day.

In afternoon trading Wednesday, the Amex Airlines Index was up 3.3 percent, with all its 13 component stocks higher.

AMR shares gained 43 cents, or 5.6 percent, to $8.10; Delta Air Lines Inc. rose 18 cents, or 2 percent, to $9.08; and United parent UAL Corp. increased 42 cents, or 5.8 percent, to $7.70.

Continental Airlines Inc. rose 55 cents, or 3.3 percent, to $17.08; Southwest Airlines Co. gained 33 cents, or 3.4 percent, to $9.91; and US Airways Group Inc. added 7 cents to $4.51.

JetBlue shares gained a penny to $5.69; while AirTran shares fell 9 cents to $5.

2009-10-14 14:45:06