CHARLOTTE, N.C. TheStreet) -- July was not so hot for the airline industry, as stocks swooned.

Although some analysts had suggested that earnings might propel the depressed sector, the hope was misplaced. Since the eight major airlines started to report second-quarter earnings nine days ago, shares of all eight have declined.

Not only that, but earnings coincided with a new media lashing -- when the FAA temporarily halted collection of ticket taxes, airlines did not move immediately to give away money to the public. A positive aspect, perhaps overlooked, is that most airlines are now collecting more revenue.

One other note: A sad truth in the airline industry is that everybody -- including aircraft makers, vendors, airports, the federal government, executives and some employees -- gets rich except for the airlines and their investors. This has been true since the Wright Brothers first flew. Illustrating this fact in July is Boeing ( BA - Get Report), whose earnings beat boosted shares primarily because of strong sales to commercial airlines.

Boeing also benefited from the announcement of a major sale to American ( AMR), the only carrier to lose money in the quarter.

It is very likely that the decline in airline shares has been overdone, wrote J.P. Morgan analyst Jamie Baker, in a recent report. "We don't understand the panic," Baker said.

In his report, Baker lays out the reason for the current airline share price collapse. "The bad news is fairly straightforward: jet fuel prices have rallied and are approaching the vicinity of their April items," he said. "At the same time, the sluggish economy is gradually catching up to the industry."

But should that push shares down about 30% in 30 days? Baker said no way. In fact, he uses a "Down 30 in 30" trading rule as the basis to recommend American, United ( UAL - Get Report) and US Airways ( LCC).

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One plus for the shares is that investors are apparently ignoring the benefit of the holiday from FAA taxes that began Saturday. "Sure, this probably won't go on forever," Baker wrote. But he noted that in 1996, airlines enjoyed a tax holiday of nearly nine months, followed by a three-month holiday in 1997. "In both cases revenue improvement was clearly evident," he wrote.

Each week of tax shutdown should lift Delta's quarterly earnings by seven cents, American's by 12 cents and United's by 15 cents, Baker estimated. Only Alaska ( ALK) and Spirit ( SAVE) won't benefit because they did not raise fares for the tax holiday.

Also, panic sellers might have overlooked second-quarter revenue hits from the earthquake and tsunami in Japan. The revenue impact totaled $125 million at Delta and $100 million at United, while American CFO Bella Goren spoke, on the earnings call, of a $60 million impact from weather events and Japan.

Boeing, American: Joined at the Hip

As for Boeing, its deal with American seems to benefit both parties. Baker wrote that he, like many analysts, anticipates declining liquidity at American. But he said some of his peers apparently do not allow for the benefit of refinancing opportunities, not to mention fuel and maintenance cost savings.

American will order 200 B737 aircraft, with options for another 100, from Boeing, as well as 260 aircraft, with options and purchase rights for up to 365 more, from Airbus.

On the Boeing earnings call, CEO Jim McNerney said his company believes in the airline's future. "We have confidence in American Airlines," he said. "It's one of this country's and one of the world's great airlines. They have been managing a difficult financial equation, but they've been doing it well."

McNerney also pointed out that Boeing is not at great risk in the deal. "The confidence in our own hardware is also high," he said. "In the event of financial turbulence with American, we will work with them. If for some reason they don't need airplanes, we'll find places to put them."

Asked whether American's unique position as they only major carrier to avoid bankruptcy and honor all its obligations had made Boeing more willing to provide favorable terms, McNerney responded: "It certainly speaks to the strength and focus of that management team, and I give them high marks for managing through a tough time and keeping the team with them."

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

>To contact the writer of this article, click here: Ted Reed