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Airline stocks take off
March 28, 2000: 1:16 p.m. ET

Positive earnings outlook by United helps lift other stocks in the sector
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - Shares of UAL Corp. soared Tuesday, and many other airlines followed behind as investors cheered the positive earnings outlook issued late Monday by the world's largest airline.
    UAL, owner of United Airlines, said that stronger than expected passenger demand and pricing is helping the airline make up for the increased cost of fuel. It said its earnings excluding special charges in the quarter would exceed the 80 cents to $1.20 a share guidance that it previously offered. Analysts surveyed by earnings tracker First Call had forecast only 98 cents a share earnings in the period.
    graphic"The continued robust growth of the domestic economy is resulting in stronger than expected passenger demand in the first quarter," said the company's statement after the market closed Monday. "This coupled with the recent improvements in the domestic pricing environment is resulting in stronger than expected domestic revenue performance. Pacific traffic is also beginning to show marked improvement, notably in the Hong Kong and Japan markets."
    Ray Neidl, an analyst with ING Barings, said the gains in the sector are due to investors' new confidence about future demand, not the results in the soon to be completed first quarter. He said most of the good news at United is due to factors unique to the carrier, not the entire sector.
    "I think the market was looking for an excuse to buy airlines and UAL was the excuse for it today," said Neidl. "In the first quarter, probably half the majors are going to lose money, but I think that's already factored into the market. I think investors are already looking towards the second quarter."
    graphicFirst Call's forecast is for Northwest, Continental, US Airways and TWA to lose money in the period, and Neidl said he's still in the process of lowering estimates for the first quarter.
    In midday trading Tuesday UAL (UAL: Research, Estimates) shares rose 2-3/16, or 4 percent, to 59-3/16. Also rising 4 percent each were AMR Corp. (AMR: Research, Estimates), owner of American Airlines, the nation's second largest carrier, whose shares gained 1-3/16 to 32-5/16, number three carrier Delta Air Lines (DAL: Research, Estimates), up 2-1/4 to 54-1/4, and Northwest Airlines (NWAC: Research, Estimates), which gained 11/16 to 20. Continental Airlines (CAL: Research, Estimates) climbed 2, or 5 percent, to 41-15/16, while US Airways Group Inc. (U: Research, Estimates), which last weekend settled a contentious negotiation with flight attendants on the cusp of a possible shut-down, rose 1-9/16, or 6 percent, to 26-3/16. The only major carrier not to report a gain was Trans World Airlines (TWA: Research, Estimates), which was unchanged at 2-7/16. Back to top


Airlines turn to passengers for help on fuel - Jan. 21, 2000

UAL, AMR better, but US Airways worse than expected - Jan. 19, 2000


United Airlines

UAL Corp. - Company information

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