Reuters logo
UPDATE-1 Continental report lifts airline shares
January 5, 2010 / 9:14 PM / 8 years ago

UPDATE-1 Continental report lifts airline shares

* Continental shares jump 13.7 pct; UAL, AMR also rise

* Airlines resilient on Wall Street after December scare

* U.S. carriers support new airport security rules (Recasts, adds security comments)

By Kyle Peterson and John Crawley

CHICAGO/WASHINGTON, Jan 5 (Reuters) - Stronger traffic and revenue at Continental Airlines (CAL.N) pushed industry shares higher on Tuesday as analysts began 2010 with fresh optimism about the sector’s prospects.

Investors focused on operations as major airlines said they supported new federal government security rules imposed after a failed attempt on December 25 to bomb a U.S.-bound Northwest jetliner. A 23-year-old Nigerian passenger on the flight has been charged.

Analysts and consultants agreed that airlines and passengers have over the years learned to manage security scares effectively, so long as any new screening requirements do not significantly increase travel wait times.

“I don’t think there is a drag and I don’t think there will be,” said analyst Roger King of Creditsights. “Airlines are resilient.”

Shares fell immediately after the Christmas Day incident but rallied in the new year despite a drumbeat of security news and consistently higher oil prices in recent weeks.

Continental shares jumped 13.7 percent at $20.62 on the New York Stock Exchange after the company said on Monday that the pace of revenue declines slowed in December from November. Continental also reported that its planes were fuller and traffic was up.

“We think these trends demonstrate improving passenger travel demand,” said Jim Corridore, analyst with Standard & Poor’s Equity Research.

Soft travel demand blamed on recession in 2009 accelerated the industry’s late-decade downturn. Carriers report fourth-quarter and year-end results later this month.

Continental's December operating report and positive analyst comments lifted other carriers as well, with the Arca airline index .XAL up 5.2 percent.

US Airways LCC.N rose 11.3 percent; American Airlines, a unit of AMR Corp AMR.N, was up 8.3 percent, and United Airlines, a unit of UAL Corp UAUA.O, rose 8.7 percent.

Analyst Helane Becker of Jesup & Lamont Securities said December traffic figures so far are reasonably good overall and business travel appears to have been “fairly strong.”

“It will be interesting to see what happens after this week” once lingering holiday travelers arrive home and the industry settles into its typically slower winter period.

The Air Transport Association in Washington said on Tuesday it supported the updated Homeland Security Department guidelines for passenger screening that went into effect on Monday.

“We think they enhance security for passengers,” said ATA spokeswoman Elizabeth Merida.

It was an important endorsement from the trade group representing major U.S. airlines since domestic and international carriers privately pushed back at security steps temporarily imposed by the government after the bombing scare.

They feared new airport delays for passengers would especially hurt premium paying business travelers.

The additional security procedures imposed by the U.S. government target passengers flying to the United States from more than a dozen countries, including Iran, Yemen, Afghanistan, Pakistan and Nigeria.

The rules also include random screening and other security enhancements for all passengers on U.S.-bound flights. American, United, Delta, and Continental all operate international flights. (Editing by Steve Orlofsky)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below