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Revised to reflect afternoon share prices and US Airways share price leadership.



) -- Shares in

US Airways


were leading airline stock prices higher Thursday,reflecting the carrier's unhedged position as oil prices fall, combined with continuing merger speculation.

Most airline shares were rising after three analysts this week upgraded the entire airline industry, which is a beneficiary of falling oil prices, continuing strong demand, industrywide capacity discipline, and ancillary revenues -- mainly from bag fees -- that total about $1 billion annually at the big three airlines and $500 million annually at US Airways.

Airline operating profits should rise 55% in 2012 and another 40% in 2013, JPMorgan analyst Jamie Baker wrote in a report, issued Thursday, which apparently was a key factor in Thursday's price gains. In mid-afternoon trading, US Airways shares were up $1.04 or 9.5% to $12.11. The shares are up about 132% for the year and trading at their highest level since November 2010.

Also, shares in


(UAL) - Get United Airlines Holdings, Inc. Report

were up $1.13 or 5% to $23.56, while


(LUV) - Get Southwest Airlines Co. Report

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shares were up 36 cents or 4% to $8.74 and


(DAL) - Get Delta Air Lines, Inc. Report

shares were up 43 cents or 4% to $11.22.

"Lower fuel has a material impact (and) jet fuel prices have collapsed roughly 40 cents per gallon since February, representing an annualized $5.5 billion windfall for the industry," Baker wrote. "Yet, since the end of earnings (season) consensus has barely budged.

"Consensus appears wholly inadequate to us," he said.

Baker raised year-end price targets to $39.50 from $37.50 for


(ALK) - Get Alaska Air Group, Inc. Report

; to $17 from $14.50 for US Airways; to $38 from $35 for United; to $9 from $8.50 for


(JBLU) - Get JetBlue Airways Corporation Report

; and to $12.50 from $12 for Southwest. (JP Morgan is restricted regarding Delta due to involvement in an ongoing transaction.)

Baker's upgrades follow similar actions earlier this week by Dahlman Rose analyst Helane Becker and Bank of America Merrill Lynch analyst Glenn Engel, who also raised estimates for all carriers.

"With lower jet fuel costs and improving revenues we are adjusting our second quarter and 2012 estimates," Becker wrote. "On average we lowered jet fuel and increased EPS by 10 cents." But Becker increased her estimate on US Airways by 28 cents because the carrier does not hedge fuel, meaning its benefit from declining fuel prices is unimpaired.

Becker has buys on Alaska, Delta, Southwest,


(SAVE) - Get Spirit Airlines, Inc. Report

and United and holds on JetBlue and US Airways, which has said it is pursuing a merger with bankrupt



Engel, meanwhile, wrote that "many airline stocks have more than 50% upside potential over the next year." His top pick is Delta, with a $15 price target.

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

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