U.S. Airlines Shares Up on Fuel Prices, Improved Outlook

Airline shares vaulted higher, as investors entered a new year expecting cheaper fuel and higher fares.

The Amex airline index rose along with American Airlines parent AMR, Continental Airlines, U.S. Airways and United Airlines parent UAL.


"I think they're just up because people are looking ahead, and most people think that 2007 will be better because of high price points and lower oil prices," said Benchmark Co. analyst Helane Becker.

The airline industry has been battered in recent years by soaring fuel prices -- directly linked to the price of oil -- and low-fare competition.

The price of NYMEX crude oil futures fell. Meanwhile, a trend toward higher fares continued, with major carriers matching a fare hike last week by Southwest Airlines.

Another analyst, Jamie Baker at JP Morgan, noted in a research letter that Continental had estimated stronger-than-expected revenue for December. Continental is the only major carrier to report monthly revenue estimates, and the data often move share prices throughout the airline industry.

Continental estimated that passenger revenue increased 5.5% to 6.5%.

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