23-Dec-2009 4:26 PM

Delta Air Lines and United Airlines shares rise to highest levels in 11 months

Analysis

North and South American carriers' stocks rebounded on Tuesday (22-Dec-2009), as analysts at UBS raised their price targets for a number of carriers and oil prices dropped.

Oil prices fell 0.07% to USD73.77, as oil-producing countries elected to leave production volumes unchanged. As a result, the AMEX Airline Index rose 4.6%. Stocks were also assisted by gains in the wider market, with the Dow ending trading up 0.5%.

UBS raises price targets and 2010 earnings forecasts

UBS analyst, Kevin Crissey, increased his 12-month price targets and profit forecasts for a number of North American carriers during trading. According to Mr Crissey, even if passenger traffic does not continue to improve, airline revenue could increase 1.5% year-on-year in Jan-2010 and 4.5% in Feb-2010.

UBS raised price targets on the following carriers:

Alaska Air (+3.5%): from USD40 to USD42, rating 'Buy';
American Airlines (+3.5%): from USD10 to USD12, rating 'Buy';
Continental Airlines (+4.9%): from USD22 to USD 23, rating 'Buy';
Delta Air Lines (+3.5%): from USD12 to USD15, rating 'Buy';
Southwest Airlines (+1.2%): from USD10 to USD 12, rating 'Neutral';
United Airlines (+12.2%): from USD15 to USD24, rating 'Buy'.

2010 profit forecast for the following carriers are as follows:

AirTran (+2.5%): USD0.70 a share;
Alaska Air: USD4.38 a share;
Continental Airlines: USD1.59;
Delta Air Lines: USD0.91 a share;
JetBlue (+4.2%): USD0.48 a share;
Southwest: 0.51 a share;

2010 losses were also narrowed:

American Airlines: USD1.25 a share;
US Airways (+11.5%): USD0.26 a share;
United Airlines: USD0.41 a share.

Delta and United rise to highest prices in 11 months

As a result of the UBS outlook, both Delta Air Lines and United Airlines rose to their highest stock prices in at least 11 months. Delta ended trading at USD11.79 (+3.5%), while United closed at USD12.93 (+12.2%).

Both carriers' stocks have been increasing since early Nov-2009, as investors see signs of the start of a recovery from the global financial downturn.

Delta Air Lines stock prices: 21-Sep-2009 to 22-Dec-2009

United Airlines stock prices: 21-Sep-2009 to 22-Dec-2009

ExpressJet (-2.8%), FedEx (-1.4%) and WestJet (-1.4%) meanwhile fell back on Tuesday.

North & South America selected airlines daily share price movements (% change): 22-Dec-09

Delta Air Lines and United Airlines shares rise to highest levels in 11 months

UBS raises price targets and 2010 earnings forecasts

Delta and United rise to highest prices in 11 months

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