What Lifted US Airways Shares?

PHOENIX TheStreet) -- AMR(AMR) said Thursday that it had secured $2.9 billion in financing, its shares rose 20%. But US Airways(LCC) shares rose 17% on no news.

In assessing the share-price increase, ignore the chatter making the rounds in aviation circles, that American might move to acquire US Airways, or at least US Airways' most valuable assets: positions at key Northeast airports and in Charlotte, N.C., the only southeastern hub besides Atlanta.

Like Japan, the Southeastern U.S. is a place with two major carriers in a world with three major aviation alliances. Even so, the American/US Airways talk seems absurd.

In a report Friday, J.P. Morgan analyst Jamie Baker said the surge in US Airways shares "left us somewhat puzzled," as did "the deluge of inquiries as to 'is it LCC's turn now?'" to follow the American financing deal.

"While US Airways' liquidity needs are considered to be sufficient given current fundamentals, their capital-raising abilities are less bountiful," Baker wrote. "Those expecting a similarly-sized LCC liquidity transaction are likely to be disappointed, in our view."

US Airways has completed a series of smaller financing transactions. During the second quarter, it secured commitments for about $700 million, providing financing for two dozen new airplanes scheduled for 2009 delivery. In addition, the carrier completed a $200 million sale to its credit card issuer in October 2008. American's financing deals included a $1 billion deal with its vendor Citigroup(C), and American said it had financed all airplanes through 2011.

In trading Friday afternoon, shares in AMR were down 10 cents at $8.70, while US Airways shares were down 15 cents at $4.98.

-- Written by Ted Reed in Charlotte, N.C.

>To order reprints of this article, click here: Reprints