CHARLOTTE, N.C. -- This morning's surge in the shares of AMR ( AMR), the first airline to report, is a sign of what is coming this week and next, says veteran airline analyst Bob McAdoo.

McAdoo, an analyst at Avondale Partners, made a good call Monday morning, issuing a report titled: "Buy the airlines before they report."

AMR shares were trading Wednesday afternoon at $4.98, up about 18%, after the carrier beat estimates, losing $1.35 a share when analysts surveyed by Thomson Reuters had estimated a loss of $1.68.

"The real story now is that people are worried that the world is coming to an end," he said. "But here we are in the worst recession ever, people relate it to the 1930s, and in what is seasonally the worst time of year, the dead of winter, and American did slightly better than last year."

American's loss of $1.35 a share was 2 cents better than its loss of $1.37 in the first quarter of 2009. Like most other carriers, American is benefitting from capacity cuts and sharply lower fuel prices.

"Airlines are trading as if headed for bankruptcy this year, (but) we believe the various earnings calls will largely dispel those worries," McAdoo wrote in his report.

The Amex Airline Index was up about 3% early Wednesday afternoon. The index rose 11% last week, but is still down about 25% this year. Southwest ( LUV) will report Thursday. Most carriers report next week.

It should be noted that in June 2008, McAdoo forecast that airline shares could double or triple if oil prices stabilized. Afterward, oil prices stabilized and the index rose as much as 68%, although it has given up much of those gains and now is up about 8% in the time period.

McAdoo says he likes all of the airline stocks. That includes US Airways ( LUV), which is constantly the subject of reports saying it is weakly capitalized and facing financial distress as soon as the summer ends.

"The market cap of US Airways is a crazy number, $429 million," McAdoo says. "It's a micro-cap, yet it has (forward) revenue of $11 billion." Jesup & Lamont analyst Helane Becker also recommends US Airways, as well as AirTran ( AAI).

McAdoo is not the only veteran airline analyst to see opportunity in the sector. FTN Securities analyst Mike Derchin recently argued, in a debate at the Wings Club, that the industry will be profitable this year. Derchin anticipates the industry will earn $3 billion to $4 billion this year, despite first-quarter losses around $2 billion. "We are net long the airlines and would recommend a basket of network and low-cost carriers," Derchin wrote, in a recent report.

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