Positive Traffic Reports and Lower Oil Prices Boost Airline Stocks

Airline stocks rallied on news of a positive March traffic report by Continental Airlines, which came as a surprise to many, after Continental warned of a challenging Q1 last month. Continental says passenger revenue per available seat mile [RASM] rose 4.5 - 5.5% y-o-y as traffic increased 3.4% and capacity rose 1.8%. Shares of Continental jumped 8.4% to $39.08, U.S. Airways gained 6.3% to $47.87, American Airlines parent AMR Corp rose 5.3% to $31.93, UAL Corp gained 4.8% to $40.17, JetBlue was up 3.6% to $11.86 and Southwest rose 2.2% to $15.08. Continental reports Q1 earnings April 19, with analysts expecting it to break even, according to Thomson. A J.P. Morgan analyst noted the strong March performance "portends a quarterly profit ... hopefully serving as a reassuring reminder that demand trends remain intact." An S&P analyst called Continental's results "encouraging" saying it "provides hope that a recent slowing in RASM isn't as much as previously feared." Also helping airline stocks was a 2% fall in crude futures. Ryanair, Europe's largest budget airline, just announced March traffic increased 26%, but load factor fell 1% to 78%. Separately, MarketWatch says Northwest Airlines will offer 27.8 million new shares priced at $27/share as part of its exit from Chapter 11 bankruptcy.

Sources: Press release, BusinessWeek, Forbes, MarketWatch [i, ii, iii], Reuters
Commentary: Goldman: United Airlines, JetBlue Should Outperform Peers • There's a Reason There Is No Airline ETF • Continental Narrows Loss in 4Q06
Stocks/ETFs to watch: Continental Airlines Inc. (CAL), AMR Corporation (AMR), Southwest Airlines Co. (LUV), UAL Corp. (UAUA), U.S. Airways Group (LCC), JetBlue Airways Corp. (JBLU), Ryanair Holdings Plc (RYAAY), Delta Air Lines Inc. (DALRQ.PK), Northwest Airlines Corp. (NWACQ.PK)

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.