NEW YORK (

TheStreet

) -- Stifel Nicolaus has upgraded

AMR

(AMR)

citing higher passenger revenue per available seat mile (PRASM) estimates as well as reduced risks following Japan Airlines' (JAL) decision to keep its alliance with AMR's American Airlines and its oneworld global alliance.

"We believe a JAL defection to SkyTeam would have had a significantly negative impact on AMR's share price," Stifel analyst Hunter Keay noted.

Keay has upgraded his rating on shares of AMR from hold to buy.

Japan Airlines had been considering forming an alliance with

Delta

(DAL) - Get Report

and its SkyTeam airline alliance and breaking off its ties with American Airlines and oneworld.

The Associated Press

reports that Delta and its SkyTeam alliance currently control 30% of the U.S.-Japan market share, which would have risen to 54% if JAL joined SkyTeam. Meanwhile, the share of American Airlines and its oneworld alliance partners would have shrunk from 35% to 6% in JAL's absence.

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Stifel says based on its estimates for AMR's January PRASM and other data, its full year PRASM estimates for AMR appears to have been too conservative. So Stifel is raising its 2010 consolidated PRASM estimate from 9% year-on-year to 10.7% year-on-year.

AMR stock has risen 0.7% to $8.60, while Delta shares have fallen 0.5% to $11.80. Airlines stocks are generally trading in the red after the opening bell.

Continental

(CAL) - Get Report

stock has inched down 0.9% to $18.70, and

UAL

( UAUA) has lost 2.2% at $15.30.

-- Reported by Andrea Tse in New York

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