This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

JetBlue Leads Airline Stocks Hit Parade

Stocks in this article: JBLU UAL LUV ALK AMR LCC HA

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

NEW YORK ( TheStreet) -- Strong third-quarter results have left the airline industry feeling good about itself.

"Earnings season proved an unqualified success, in our view," wrote J.P. Morgan analyst Jamie Baker in a report issued late Sunday. He noted that no airlines shut down during the economic downturn. "The industry is generating record profits despite anemic U.S. growth," he said.

Airline shares rose 4.4% last week, as every major carrier reported earnings on Wednesday or Thursday.

Deutsche Bank analyst Mike Linenberg noted that the industry's net income totaled $2.5 billion for the quarter, besting his estimate of $2.3 billion. "One notable take-away from the conference calls was that unit revenues appear to be holding up well as we move into the December quarter, despite more difficult comps," he said.

Rising fuel prices remain the industry's biggest potential threat. "Higher fuel prices worry us more than a slowing economy," wrote Dahlman Rose analyst Helane Becker. But Avondale Partners analyst Bob McAdoo wrote that "the industry has already shown the ability to generate record earnings in the face of a weak economy, high unemployment, and near-$80 oil."

With capacity under control, McAdoo said "we believe next year will be a continuation of record, or near-record, results -- even better if the economy strengthens over the next four to five months."

He added that "it's difficult to distinguish meaningful differences in the various airlines' performances and results."

Still, some carriers stand out.

In particular, JetBlue (JBLU) reported a 13.6% third quarter operating margin, its highest since 2004 and 5.9 points higher than last year's 7.7% margin. It was also the second highest among all major carrier's after Alaska's (ALK) 19.6%, Linenberg noted. He has a 12-month price target of $8. Shares traded Monday morning at $7.03, up 19 cents.

Baker upgraded JetBlue to overweight, with a price target of $9. He also downgraded Southwest (LUV) to neutral, reducing his price target to $15.50 from $16, citing recent price appreciation and integration risk.

1 of 2

Select the service that is right for you!

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 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • 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