NEW YORK TheStreet) -- The long depressed airline sector is having a good week. Of the top nine carriers, seven have seen double-digit stock price increases since Monday, a four-day period over which the S&P 500 has risen about 4%.
Shares of both US Airways ( LCC) and Delta ( DAL - Get Report) are up about 18%. United Continenal's ( UAL - Get Report) stock has gained 14%, while shares of Spirit Airlines ( SAVE)is up 13%. Alaska Airlines ( ALK) and JetBlue ( JBLU) are all up 12%. The Amex Airlines Index ( XAL) has jumped about 7%. Shares of AMR Corp. ( AMR - Get Report), the parent company of American Airlines, are up 9% and Southwest Airlines ( LUV) has seen appreciation of 7%. The increases reflect a combination of continued strong demand and moderating fuel prices. One catalyst was presentations Tuesday at a Deutsche Bank investor day, where several airline executives laid out the case for their carriers and the industry. The
big winner was US Airways shares, which rose 15% after President Scott Kirby said that from the airline industry's point of view: "I would think we are in the middle of a pretty strong economy. "It's completely disconnected from the headlines," Kirby said. Delta President Ed Bastian also garnered attention, saying the airline industry has remade itself, cutting capacity and instituting fees for services. "We really believe that this time is different," Bastian said. Bastian noted that Delta's "September quarter is coming in better than we expected," with operating margin between 9% and 11%, exceeding July guidance of 7% to 9%. Another winner this week is Hawaiian Airlines ( HA - Get Report), up 16%. On Tuesday, Hawaiian said it would add Fukuoka as its third Japanese destination from Honolulu, starting in April, adding about 100,000 seats annually, with most expected to be filled by Japanese tourists. In a research report, Avondale Partners analyst Bob McAdoo wrote that about 95% of Hawaiian's passengers buy their tickets with yen, which is strong, while the airline pays its costs in dollars. By that logic, McAdoo says, Hawaiian shares also include a currency play. "Hawaiian's revenue per available seat mile, or RASM, on the Tokyo Haneda to Honolulu flights is already the highest among all of Hawaiian's long-haul service," McAdoo wrote. "Hawaiian's shares, meanwhile, trade at distressed levels and, seemingly, do not reflect Hawaiian's stronger revenues or the potential associated with its new Japan service." He has a buy recommendation and a $9 price target on the stock. At the Deutsche Bank conference, Hawaiian CFO Peter Ingram said third-quarter RASM should increase between 12.5% and 15.5%. "The company is seeing a strong yield environment, particularly on its two routes between Hawaii and Japan, which management noted were the best," wrote Deutsche Bank analyst Mike Linenberg, in a note. -- Written by Ted Reed in Charlotte, N.C. >To contact the writer of this article, click here: Ted Reed
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