NEW YORK (TheStreet) -- Veteran JPMorgan airline analyst Jamie Baker said he doesn't get why airline stocks continue to slump despite several recent signs that carriers are cutting back on capacity growth plans.

In a note issue late Thursday, Baker wrote that several recent developments -- including Delta's (DAL - Get Report) attempt on Thursday to again raise domestic fares, just a week after an industry-wide domestic fare increase took effect -- makes him think an end to the airline share price slump may be overdue.

 "Sentiment remains poor, despite improving headlines," Baker wrote.

In the past week, he noted that "Southwest (LUV - Get Report) has ratcheted back growth. United (UAL) has announced a material cut in transcon capacity (and) American (AAL) has deferred aircraft, again."

Also, domestic fares are rising, whether or not the industry follows Delta's lead in imposing a $2 one-way, across-the board domestic fare increase. Baker said he would be surprised if the industry follows Delta's lead "but we see no harm in trying."

Baker thinks the positive developments suggest "that industry discipline is alive and kicking.

"Frankly, we're puzzled as to why fundamentals still remain overwhelmed by negative sentiment," he wrote. "Whether this means that stocks are likely to start working soon or to wait to digest anticipated capacity cuts as part of the 2Q earnings is unclear to us. But when sentiment gets this bad and the phones (at least ours) stop ringing, a turning point for equities typically follows, in our experience."

On Thursday, Spirit (SAVE) shares were flat but shares of every major airline rose, with gains ranging from 0.06% at Southwest to 4% at Virgin America (VA).

Year to date, American shares are down 25%, United shares are down 22%, Southwest shares are down 20% and Delta shares are down 16%. The industry's best performer is JetBlue (JBLU), with shares up 26%.

Despite Baker's optimism, a continuing negative for airline shares is that passenger revenue per available seat mile numbers, a closely watched industry metric, continues to slump.

In a note issued late Thursday, Deutsche Bank analyst Mike Linenberg, citing Airlines for America figures, wrote that overall industry PRASM declined 5.9% in May, led by declines of 6.4% at Alaska (ALK), 6% at Southwest and 5.5% at Delta.

The overall result "came in slightly worse than our forecast of down 4% to 5% as we have since seen downward revenue guidance revisions for June Q 2015 from many of the carriers," Linenberg wrote.

Looking ahead, Credit Suisse analyst Julie Yates wrote Thursday that "third-quarter PRASM performance is unlikely to be materially better than Q2.

"While management teams endorsed Q2 as the trough for Y/Y unit revenues, the deterioration in May caught most off guard and we expected the reduced visibility to be reflected in tone and confidence, making incremental capacity cuts all the more crucial," Yates wrote.

She said she believes that the airline industry has changed for the better, with management teams committed to capacity discipline and higher returns, but "for our conviction to remain, we too need companies to offer signals that unit revenue declines are temporary and there is a willingness to balance supply and demand."

Yates sees "the least risk around earnings" for Alaska, JetBlue and Delta. She sees "downside risk to consensus" for American and Spirit.


This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.