Air Canada and US Airways soar in buoyant day for airline stocks

Wall Street rallied yesterday, with the Dow pushing back above the 10,000 mark, ahead of the start of the second quarter profit-reporting season. The Dow Jones Industrial Average surged 274.7 points (or 2.8%) to 10,018 – its biggest daily gain since 27-May-2010 – to reach its best close since 28-Jun-2010.

US Airways was again the biggest winner soaring 15.4%, as it reported a healthy 22% surge in RASM last month and enjoyed a technical rally as interest spiked in call options for the stock. The airline’s system traffic rose 2.9% in Jun-2010, against a year-to-date decrease of 0.9%, suggesting conditions are improving.

Soleil Securities reiterated a buy rating on US Airways, increasing its price target from USD12 to USD13 per share, citing better-than-expected June revenue data. Soleil stated US Airways stock is "an especially leveraged way to play an ongoing US airline recovery".

Elsewhere, Air Canada was raised to a “buy” by Versant Partners, citing better-than-expected June traffic results, higher fares and a recent decline in its shares for the upgrade. Versant Partners raised its price target from CAD3 to CAD4 per share but cautioned “an investment in Air Canada remains a higher risk proposition”.

Air Canada’s B-shares soared 13.9% yesterday, while WestJet and Jazz Air both eased 0.2%.

Other big gainers were United Airlines (+7.6%), Expressjet (+7.5%), Republic Airways (+7.2%) and Southwest (+6.2%).

North & South America selected airlines daily share price movements (% change): 07-Jul-2010