This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Airlines Garner More Acclaim

Airline stocks rallied Wednesday for the second time this week after another Wall Street analyst issued a bullish call on the sector's prospects.

Capacity adjustments, including reductions on U.S. domestic routes, should boost unit revenue next year, according to Bear Stearns' David Strine, who adds that a major beneficiary will be American Airlines' parent AMR (AMR). Strine raised AMR to outperform from peer perform and increased his bottom-line estimates for other carriers.

Shares of AMR, the world's largest airline company, gained 73 cents, or 5.5%, to $14.05. Most other airline stocks followed, driving the Amex Airline Index 3.3% higher.

AirTran (AAI) rose 1.8%, Alaska Air (ALK) increased 5.3%, Continental (CAL) gained 3.3%, JetBlue (JBLU) advanced 2.2%, Southwest (LUV) added 2.3%, and US Airways (LCC) rose 11%.

Strine joins other investment-bank analysts offering optimistic forecasts for airlines as they head into 2006. Last week, J.P. Morgan's Jamie Baker upped his ratings on AMR and Continental, saying he felt better "about the industry's near-term prospects and equity potential upside than at any time this decade."

Then on Monday, Lehman Brothers' Gary Chase sent airline stocks on a tear with an upgrade on AMR and positive comments on the sector. All three analysts' firms do and seek to do business with companies covered in their research reports.

Strine has surveyed Asian, European and U.S. airlines to get a global read on capacity plans, his research note indicates. With U.S. legacy carriers cutting domestic capacity 6%, industry unit revenue should grow 6% in 2006, its best rate in five years, the analyst says. Capacity decreases often allow airlines to either raise fares, fill more seats, or both, lifting unit revenue.

Although U.S. legacy carriers plan to boost international capacity 7% next year, growth plans from European and Asian airlines are more moderate, and capacity-to-gross domestic product ratios are below historical averages everywhere but Latin America, according to Strine.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,578.83 +179.16 1.09%
S&P 500 1,936.46 +32.45 1.70%
NASDAQ 4,409.2320 +93.1580 2.16%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs