Airlines Soar Above Pandemic Pessimism

• By the tickerspy.com Staff
• On 11:03 am EDT, Thursday September 17, 2009

Can American Airlines' parent sustain its recent rally as travelers fly into the height of the flu season?

A month ago American Airlines parent AMR Corporation (NYSE: AMR - News) traded for less than $5 a share. The stock is now soaring near the $9 mark, adding another 20% after the company announced that it has raised $2.9 billion in funding. According to The Wall Street Journal, AMR sold $1.3 billion in assets, negotiated a $1.6 billion aircraft sale-leaseback deal with General Electric (NYSE: GE - News), and will net another $1 billion from the sale of frequent flyer miles to Citigroup (NYSE: C - News).

The company is also looking to buy a stake Japan Airlines (OTC: JALSY - News), according to The Journal. Delta Air Lines (NYSE: DAL - News) is also reportedly in talks with the Japanese carrier, which Forbes.com said was hurt by, among other things, H1N1 swine flu virus fears.

As a whole, the Airline Stocks Index is ahead by 1.7% in today. Investors don't appear to be too worried about the potential impact of swine flu on the sector this fall, sending airline stocks higher by an average 25% over the last month. However, according to recent reports, some high-rolling fliers aren't taking any chances.

Rob Dore, a director at England-based air charter company Jet Direct told Bloomberg, "Swine flu has certainly increased traffic," as corporate clients, "are concerned about the well-being of their staff from a commercial, as well as moral, standpoint."

Losing highly profitable first-class fliers to charter service could weigh on carriers like British Airways (NYSE: BAY - News), Continental Airlines (NYSE: CAL - News), and United Air Lines parent UAL (NASDAQ: UAUA - News). Berkshire Hathaway's (NYSE: BRK-A - News, BRK-B - News) NetJets should benefit from corporate clients flight to germ-free travel.

As of this writing, the Airline Stocks Index is one of the top-10 performing tickerspy Indexes over the last month.

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