Sector Snap: Airlines stocks rise again
Airline stocks climb again after final batch of second-quarter earnings
* On Friday July 24, 2009, 1:13 pm EDT
The AMEX Airline Index rose 3 percent, with nine of its 13 component stocks higher.
That beat the broader market, which leveled off after Thursday's rally that sent the Dow Jones industrials above 9,000 for the first time in six months. Disappointing earnings from Microsoft Corp. and Amazon.com Inc. slowed the Nasdaq index and provided more signs that consumers are still spending cautiously.
The rise in airline shares also countered another small increase in oil prices. Benchmark crude for September rose 11 cents to $67.27 a barrel on the New York Mercantile Exchange at midday, as oil prices had climbed $1.70 per barrel this week.
Six of the largest nine U.S. airline companies reported profits for the second quarter, although the group as a whole lost about $600 million. Still, that was less than some analysts had forecast.
The peak summer vacation travel season is well along, and traffic always drops in the fall. UBS analyst Kevin Crissey said that while airline revenue has been improving, "the starting point, however, was a deep hole."
July revenue per capacity, a key measure of financial performance for airlines, is down about 16 percent from last July, August could be off 20 percent, and September "could be the worst month of the year," Crissey said.
In recent days, airline CEOs gave wildly ranging outlooks for travel demand, with US Airways' Doug Parker sounding upbeat and Southwest's Gary Kelly warning things could get worse for the airlines. On Friday, investors seemed to be listening more to Parker.
In midday trading, shares of US Airways Group Inc. jumped 34 cents, or 14.8 percent, to $2.64; Delta Air Lines Inc. shares rose 5 cents to $6.11; American Airlines parent AMR Corp. gained 18 cents, or 4.2 percent, to $4.47; and United parent UAL Corp. added 17 cents, or 4.9 percent, to $3.61.
Continental Airlines Inc. shares rose 53 cents, or 5.7 percent, to $9.77; Southwest Airlines Co. gained 5 cents to $7.18; JetBlue Airways Corp. picked up 14 cents, or 2.8 percent, to $5.06; AirTran Holdings Inc. rose 20 cents, or 3.1 percent, to $6.65; and Alaska Airlines' parent gained 48 cents, or 2.2 percent, to $22.50.
