AMEX Airline Index soars; American Airlines and Continental up on analyst upgrades

North and South American carriers’ stocks made significant gains on Wednesday (14-Oct-2009), despite oil prices (+1.4%) closing above USD75 per barrel for the first time in exactly 12 months.

Airline stocks were pushed higher by a new annual high for the Dow (+2.3%), to over 10,000. As a result, the AMEX Airline Index rose 4.0%.

Barclays upgrades American Airlines and Continental Airlines; downgrades AirTran and JetBlue

American Airlines (+6.0%) stocks gained again on Wednesday, after analysts at Barclays Capital increased their rating of the carrier from “equal weight” to “overweight”, believing AMR would soon enter a "multi-year profit cycle". The analysts stated the carrier’s recent share issues have “dramatically improved” its liquidity, dispute the dilution of equity. However, Barclay cut AMR’s price target to USD14 from USD20.

According to SmarTrend, AMR is currently above its 50-day moving average of USD6.55 and its 200-day moving average of USD5.59. The analysts stated they are bullish on the carrier’s stocks.

AMR stock price: 14-Jul-2009 to 14-Oct-2009

Barclays Capital also raised its rating of Continental Airlines (+3.8%) from “underweight” to “equal weight”, maintaining a USD23 price target for the carrier. The analyst meanwhile increased the following carriers’ target prices:

Barclays also cut AirTran’s rating from “equal weight” to “underweight” and JetBlue’s rating from “overweight” to “equal weight”. The analysts also cut price targets for the following carriers:

FAA to fine US Airways and United Airlines

Meanwhile, the FAA announced plans during trading to fine US Airways and United Airlines for safety violations. United may be fined USD3.8 million for operating a B737 without protected caps over its oil sump area, while US Airways may be fined USD5.4 million for operating eight aircraft not compliant with air-worthiness directives.

North & South America selected airlines daily share price movements (% change): 14-Oct-09