* Positive demand projection, Wall Street outlook a plus
* Shares of United, Delta, US Airways, Southwest all up
By John Crawley
WASHINGTON, May 16 Shares of American Airlines
parent AMR Corp AMR.N and US Airways Group LCC.N led a
sector rally on Monday, helped by lower oil prices, improving
travel demand and a positive analyst outlook.
J.P. Morgan analysts Jamie Baker and Mark Streeter broadly
raised estimates and targets due to the improved operating
"We suggest investors increase their exposure to airline
equities ahead of an expected upward surge in consensus
estimates," the two wrote in a note to clients as U.S. oil
futures CLc1 slipped to $97.08 a barrel .
Jet fuel has declined 30 cents per gallon since the last
week of April, improving the prospects for airlines trying to
regain their footing after a difficult first quarter due to
fuel price gains.
Shares of AMR closed 4.9 percent higher at $6.69 and US
Airways Group LCC.N gained 5.6 percent, both on the New York
Stock Exchange. United Airlines parent United Continental
Holdings (UAL.N) gained 2.2 percent, while shares of Delta Air
Lines (DAL.N) rose 3.3 percent and Southwest Airlines Co
(LUV.N) rose 0.6 percent.
In upgrading AMR to hold from sell, Standard & Poor's
analyst Jim Corridore now expects smaller full-year losses from
American for this year and 2012.
Corridore revised his 2011 estimate for American to a loss
of $1.42 a share from $2 a share previously. For 2012, he
expects a loss of 74 cents a share, compared with a prior view
of a $1.06.
Avondale Partners analyst Bob McAdoo said receding oil
prices would help American Airlines on Wall Street, but he
stressed the company still faces management, operating and
labor cost problems.
"Moving funds from AMR to any other legacy airline is our
recommendation," McAdoo wrote in a note to clients.
While oil prices keep sliding, air travel demand continues
to rebound, although it is still off pre-recession highs of
2007 and 2008.
Separately, the Air Transport Association estimates U.S.
airlines will fly 206 million passengers from June through
August, a 1.5 percent increase over last year.
The industry's top trade group also said travelers are
booking international flights in record numbers, reflecting an
(Additional reporting by Karen Jacobs in Atlanta; Editing by
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