Sector Snap: Airline shares rise modestly

Airline shares rise slightly after upgrades to Continental, AirTran, and UAL

• On 12:25 pm EST, Monday November 2, 2009

MINNEAPOLIS (AP) -- Airline shares rose modestly on Monday, benefiting from an analyst's upgrades of Continental, AirTran, and United parent UAL Corp., along with oil prices that hovered around $77 a barrel.

The biggest gainers were Continental Airline Inc., up 23 cents, or 2 percent, to $11.73, and AirTran Holdings Inc., up 13 cents, or 3.1 percent, to $4.36. UAL rose 1 cent to $6.52.

Next General Equity Research analyst Daniel McKenzie put "buy" ratings on all three, up from previous ratings of "neutral" for AirTran and UAL and "sell" for Continental.

He wrote that the reason for the upgrade was the recent sell-off in airline shares. Still, he wrote, analyst predictions for 2010 are too optimistic. Considering the volatile economy, airlines need to cut capacity another 5 percent to 10 percent to stop cash flow instability.

Southwest Airlines Co. was down 12 cents to $8.28 shortly after announcing that its pilots had ratified a new five-year contract.

Among other airline shares, American parent AMR Corp. fell 6 cents to $5.33. Delta Air Lines Inc. was down 11 cents at $7.03. JetBlue Airways Corp. rose 5 cents to $5.01.