Most Airline Shares Up, Focus on Data

Shares of most major U.S. airlines rose moderately early on Tuesday, a day after American Airlines and Continental Airlines reported signs of improvement in sluggish air traffic demand in November, an analyst said.

American, Continental and low-cost carrier Air Tran Airways, all said late Monday that passenger loads and traffic remained weak in November following the attacks on the United States in September. 

However, airline traffic and revenue does appear to be trending in the right direction, Merrill Lynch airline analyst Michael Linenberg wrote in a research note. 

"The results from both carriers (American and Continental) were encouraging as they indicated a modest improvement in underlying demand," Linenberg wrote in a research note. 

Though only American and Continental had reported November traffic results among the largest airlines, the trend suggests that November domestic passenger unit revenue could be improved over the 23.9 percent drop in October, he wrote. 

American Airlines, the world's largest carrier and a unit of AMR Corp., said its systemwide load factor — a measure of how much airline capacity is used — fell 4.2 points to 65.6 percent compared with 69.8 percent a year earlier. 

The performance was "markedly better" than in October and most notable was improvement in domestic load factor, which dropped 2.2 points to 67.3 percent in November compared with a 8.1 point drop to 61 percent in October, Linenberg wrote. 

AMR shares rose 43 cents, or 2.05 percent, to $21.37 Tuesday morning. Continental shares rose 49 cents, or 2.15 percent, to $23.30 and Northwest Airlines shares rose 34 cents, or 1.95 percent, to $17.70. 

The American Stock Exchange airline index rose about 1.2 percent early, while the Standard & Poor's 500 index rose and Dow Jones Industrial average were about unchanged. 

Houston-based Continental Airlines, the fifth largest U.S. air carrier, said its systemwide load factor for November slipped 1.2 points but also reported its unit revenues, while still weak, had inched up from October. 

Continental's revenue performance also appeared to be better in the second half of November than it was in the first half, Linenberg wrote. The systemwide load factor also improved steadily throughout November and the air carrier said Christmas holiday bookings have been strong and should translate into load factors similar to last year, he wrote. 

Continental is the only major airline that supplies monthly unit revenue reports. 

AirTran Airways, a unit of AirTran Holdings said on Monday that its load factor fell 7.1 points to 65.1 percent in November compared with 72.2 percent a year earlier. AirTran shares rose 9 cents, or 1.5 percent, to $6.10.