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

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:

2010 losses were also narrowed:

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