The bulls on airline stocks emerged in force on Tuesday as four Wall Street analysts touted the sector, despite expectations for record fourth-quarter losses following the Sept. 11 attacks. 

Wall Street has been cautiously optimistic about a 2002 recovery for the airline industry in recent weeks. But Tuesday's flurry of positive reports sent stocks surging in early trading on the New York Stock Exchange and the Nasdaq. 

Leading the gains was America West Holdings, up 22 percent on an upgrade by Goldman Sachs analyst Glenn Engel. He now rates the stock ``market outperform'' from ``market perform.'' 

The airline stock gains followed appreciation in recent weeks as oil prices declined, traffic picked up and analysts predicted the worst for the airline industry was now over. 

Immediately after the hijackings of four jets, travel demand dropped by half. Traffic, measured by a standard called revenue per available seat mile, has rebounded gradually, and the Christmas holiday period was strong. 

America West Airlines, the No. 8 U.S. carrier, on Monday said it satisfied conditions for government loan guarantees that were part of a $15 billion federal bailout package passed immediately after the attacks. The guarantees pave the way for a $429 million private-sector loan that Engel said will give the airline enough cash to outlast the current downturn. 

Without the loan guarantees, Phoenix-based America West had predicted an imminent bankruptcy filing. 

Next in line on the gainers list was United Airlines parent UAL Corp., rallying 7.5 percent after Credit Suisse First Boston analyst James Higgins upgraded the stock to ``buy'' from ``hold.'' 

UAL is undergoing labor negotiations with 15,000 mechanics who have voted to strike. Higgins believes, however, that management will be able to convince labor that wage concessions are needed. 

``We expect a politically influenced settlement that sets a contract level near the industry's leaders, but which also provides for wage rollbacks for the next couple of years,'' Higgins said. The No. 2 U.S. carrier, UAL is 55 percent owned by employees thanks to a 1994 employee stock ownership plan. 

UPWARD FROM THE LOW POINT 

UBS Warburg analyst Samuel Buttrick on Tuesday said the recently ended December quarter marked a new low point. He forecasts an industry-wide operating loss (earnings before interest and taxes) in the fourth quarter of $4.2 billion and a net loss of $3.2 billion. Results will be reported starting this week. 

The expected losses will bring the full-year 2001 loss to $6.4 billion. 

``Traffic in the quarter fell 19 percent with average fares down 15 percent -- producing an unprecedented passenger revenue decline of 31 percent,'' Buttrick said. ``And to think we used to think it was bad when revenue was down 6 to 8 percent.'' 

Buttrick stood by his prediction for a potential rally over the next 18 months. He recommends focusing on AMR Corp., parent of American Airlines, Continental Airlines and, for risk-takers, UAL. 

Deutsche Bank Alex.Brown analyst Susan Donofrio, who has also been bullish in recent weeks, issued a note in tune with her colleagues. ``Even in the face of sizable fourth-quarter losses, we remain quite bullish on the prospect of owning airline stocks,'' Donofrio said. 

Investors should pay attention to several things, she said. Cash positions at year-end, daily cash burn rates, capacity plans for next year and current booking and fare trends. 

Among other airline stock gainers on Tuesday, Delta Air Lines rose $1.19 to $29.99, an increase of 4.13 percent. AMR Corp. shares rose 3.7 percent to $25.45 on the New York Stock Exchange on Tuesday morning.