Airline shares rose modestly on Monday, benefiting from an analyst’s upgrades of Continental, AirTran, and United parent UAL, along with oil prices that hovered around $77 a barrel.
The biggest gainers were Continental Airline, up 26 cents, or 2.3%, to $11.58, and AirTran Holdings, down 3 cents, or 0.70%, to $4.25. UAL rose 20 cents to $6.64.
Next General Equity Research analyst Daniel McKenzie put “buy” ratings on all three, up from previous ratings of “neutral” for AirTran and UAL and “sell” for Continental.
He wrote that the reason for the upgrade was the recent selloff in airline shares. Still, he wrote, analyst predictions for 2010 are too optimistic. Considering the volatile economy, airlines need to cut capacity another 5% to 10% to stop cash-flow instability.
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