Delta Air Lines gains on analyst’s revised loss estimates; Continental and United upgraded

North and South America shares soared again on Wednesday (10-Mar-2010), with a number of carriers reaching 52-week highs. UBS raised its price target for a number of carriers.

The wider market was relatively flat, despite encouraging news that US wholesale inventories unexpectedly fell in Jan-2010 and sales reached their highest point in over a year. Banking and technology stocks also pushed markets higher.

Delta Air Lines gains on analyst’s revised loss estimates

Delta Air Lines (+3.8%) gained after Jesup & Lamont analyst, Helane Becker, narrowed her 1Q2010 loss estimate for the carrier from a loss of USD0.41 per share to our new estimate of a loss of USD0.12 per share. However, it was noted that if Mar-2010 ends strongly, the airline could “certainly be profitable”.

The new estimate came after the carrier updated its 1Q2010 guidance. Jesup & Lamont stated the key in the new guidance was that the carrier now projects an operating margin of 1-2%, compared to previous expectations of breaking even.

UBS raises price targets of American Airlines, Continental Airlines and United Airlines

American, Continental, United, Alaska Air (+5.6%), US Airways and Southwest (+1.1%) were all up after analysts at UBS lifted its price targets for the carriers’ stocks. Increases were as follows:

  • American Airlines (+2.1%): from USD12 to USD14, rating ‘Buy’;
  • Continental Airlines (+5.1%): from USD23 to USD25, rating ‘Buy’;
  • United Airlines (+4.5%): from USD24 to USD30, rating ‘Buy’;
  • Alaska Air (+5.6%): from USD47 to USD50, rating ‘Buy’;
  • US Airways (+3.9%): from USD8 to USD10, rating ‘Buy’;
  • Southwest (+1.1%): from USD13 to USD14, rating ‘’Neutral;
  • JetBlue (-0.2%): from USD5.75 to USD6, rating ‘Neutral’

However, AirTran (-0.2%), was downgraded from USD8.50 to USD8, rating ‘Buy’.

UBS analyst, Kevin Crissey, forecast unit revenue for legacy carriers in Mar-2010 will be up approximately 17% year-on-year. However, according to Mr Crissey, improvement among carriers has not been even, with United and Alaska being stand-out performers. Jesup & Lamont stated they are estimating earnings per share (EPS) of USD3.77 for Alaska, including a 1Q2010 EPS estimate of USD0.09 per share.

LAN also upgraded

LAN (+2.2%) also rose after Banchile Inversiones raised its price target for the carrier and reiterated its ‘Buy’ rating.

Air Canada (+6.7%) also witnessed significant gains for the day as it outlined its case against further rights for Dubai's Emirates, while Republic Airways (-1.2%) was down.

Also in today’s America Airline Daily:

North & South America selected airlines daily share price movements (% change):  10-Mar-2010