BUY OR SELL-US Airways shares may be set for gains

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* US Airways shares down 60 percent this year

* One analyst raise share price target

* One analyst lowers loss estimate

By Kyle Peterson

CHICAGO, Aug 19 (Reuters) - US Airways Group Inc (LCC.N), whose shares have tumbled more than 60 percent this year, could be poised for a rebound if it beefed up its international flying; but worse-than-expected unit revenue and higher fuel costs could slow that progress, experts say.

Earlier, this month, US Airways and Delta Air Lines Inc (DAL.N) agreed to a swap of takeoff and landing rights at New York LaGuardia and Washington Reagan National airports. The deal, if approved by regulators, could earn the carrier $75 million a year, US Airways said.

US Airways shares were down 1.71 percent on Wednesday afternoon at $2.88. Data from the New York Stock Exchange show that as of July 28, 19.6 percent of the outstanding US Airways shares were shorted.

RAISING PRICE TARGET

Daniel McKenzie, analyst at Next Generation Equity Research, wrote in an Aug. 13 research note that he has raised the price target on US Airways shares to $5 from $3.50, citing the slot swap with Delta as a "nice strategic move."

It is better for US Airways to focus on international routes instead of flights in an out of New York, he said.

"In contrast to the deteriorating fundamentals at some other legacy carriers, US Airways fundamentals are improving," McKenzie said.

He said he has not changed his outlook for the second half of 2009, but he narrowed his projected loss per share for the carrier to $1.00 from $1.75 in 2010.

"US Airways is no Cinderella story, but unlike others, faces better fundamentals," McKenzie said.

LOWERING ESTIMATES

Michael Derchin, senior analyst at FTN Equity Capital Markets Corp, wrote in an Aug. 12 research note, that he has lowered his 2009 loss estimate for US Airways to $4.98 per share from $3.93 per share.

Derchin said the new estimate reflects "worse than previously expected" unit revenue and "modestly higher jet fuel prices."

He said, however, that US Airways' liquidity position of $2.3 billion in total cash as of June 30 is good. Derchin also noted that US Airways likely would see a boost in ancillary revenues derived from bag check fees in 2009.

"Despite substantial losses, we do not envision liquidity issues over the coming months," Derchin said. (Reporting by Kyle Peterson, editing by Gerald E. McCormick)