Airlines Find a Way to Raise Rates

"[Justice] is just looking to rattle everyone's cage. You have unprecedented losses in this industry," said Kent Krause, managing partner at Speiser and Krause, which specializes in aviation law. "I think they'd be hard pressed to be successful if they're really serious about pursuing this. In light of the issues facing the industry, and where the $10 increase is really covering the reduction in security fees, I think they'll probably drop the matter."

Thomas Nulty, airline veteran and partner in Corporate Solutions Group, took a positive view of the fare news. "The vast majority of this fare increase will sink to the bottom line," he said.

J.P. Morgan's Baker, meanwhile, expressed caution. "Presuming said profit levels do materialize within two years and the market values profitable airlines as it often has [at] eight to 10 times forward earnings per share, it is difficult to envision anything greater than a doubling of current equity values."

Baker expects an industry loss of $600 million in the third quarter, and a loss of $200 million in the fourth quarter, the lowest loss since the second quarter of 2001. In his eyes, a cyclical recovery is just around the bend, but the stock recovery may have left the gate already.