Resilient airlines end higher on hopes for lower fuel costs

Jan.31, 2008 in Market Outlook

Oil’s pullback, Wall Street recovery lift airlines

By Christopher Hinton, MarketWatch

Last Update: 5:41 PM ET Jan 31, 2008

NEW YORK (MarketWatch) — Airline stocks posted strong gains Thursday, emerging
from a choppy open as investors gradually shrugged off fears of weaker consumer
spending to focus instead on easing fuel costs.

The Amex Airline index (XAL) rose 3.3% to finish at 36.26 points, with 11 of the
sector benchmark’s 14 components showing solid gains.

Early on, a surprisingly big increase in first-time claims for state unemployment
benefits sparked jitters among investors concerned about what a weaker job market
might mean for air travel. Stocks steadied on Wall Street, however. See Market
Snapshot.
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Crude-oil futures, meanwhile, fell 58 cents to $91.75 a barrel on concerns that a
cooling economy would spell a lesser demand for energy. See Futures Movers.
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Leading the airline sector higher were shares of discount carrier JetBlue Airways
(JBLU), up 8.7% to close at $6.91.

Among the big legacy carriers, shares of American Airlines’ parent AMR Corp.
(AMR) advanced 6.4% to $13.94, while Continental Airlines (CAL) rose 5.7% to
$27.28.

Shares of U.S. Airways Group (LCC) also traded higher, adding 3.4%, and Northwest
Airlines (NWA), up 3.1%.

Midwest Air (MEH) said a U.S. Department of Justice investigation into its
pending acquisition by a private-equity group affiliated with TPG Capital and
Northwest Airlines (NWA) was closed, allowing the transaction to go through at
the end of trade Thursday.

The private-equity group, Midwest Air Group LLC, has offered $17 a share for the
airline.

Midwest Air shares rose 3.3% to close at $16.99.

Other gainers included shares of Alaska Airlines (ALK) up 6.2% at $25.30, and
SkyWest Inc.(SKYW), up 1.8% at $26.02.

Late Wednesday, the Allied Pilots Association, which represents 12,000 American
Airlines pilots, said the National Mediation Board has denied its request for a
mediator to oversee negotiations with the carrier.

“We are disappointed that the NMB has not assigned a federal mediator to our
negotiations,” said Lloyd Hill, the union’s president. “We have spent the past
year and a half in negotiations and have been unable to resolve any contractual
issues with management, despite APA’s best efforts to do so.”

The union has accused American’s management of refusing to negotiate on issues of
pay and benefits.

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