Airlines Soar On Recovery Hopes
Melanie Lindner, 03.09.10, 04:40 PM EST
A pickup in business travel helps carriers fly.

With airline presentations at the JPMorgan Chase Aviation, Transportation & Defense Conference well underway Tuesday, shares of the nation's top carriers took off on news of industry recovery.

Shares of AMR ( AMR - news - people ), the parent company of American Airlines, led the airline pack, picking up 83 cents, or 9.3%, to $9.77. Also among the big winners was UAL ( UAUA - news - people ), parent of United Airlines, which gained 64 cents, or 3.7%, to $18.16. AirTran Holdings ( AAI - news - people ) ticked up 42 cents, or 8.5%, to 5.38, and US Airways Group ( LCC - news - people ) jumped 39 cents, or 5.3%, to close at $7.71.

According to Stifel Nicolaus analyst Hunter Keay, the airlines have easy-to-beat volume-based comparisons with this time last year when passenger revenue per available seat mile (PRASM) dropped dramatically as planes flew with many empty seats. "At this time last year airlines had yet to fully capitulate to the economic meltdown, in our opinion, and some were still holding out inventory in the hope that business travel would recover," says the analyst.

Keay tells Forbes that in Tuesday's conference presentations, the airlines showed signs of increased discipline in balancing capacity and demand, an equilibrium that's been out of balance since early 2008. The companies have also noted an increase in corporate bookings, which has helped enhance investor confidence and boost the sector in Tuesday trading.

Analyst Helane Becker of Jesup & Lamont Securities tells Forbes that international business travel has been rising in recent months. She expects Delta ( DAL - news - people ), American Airlines, and Continental Airlines ( CAL - news - people ) to get the biggest boost from this change as they have the most exposure to international travel markets.

While the airlines have been in a stronger technical position in 2010, there is some concern that the economic recovery will not be strong or sustainable enough to keep shares in orbit. Still, as Auerbach Grayson's technical analyst Rich Ross told Forbes in early January, even though names like Continental are trading near their best levels in a year, they still have open airspace before catching up to all-time highs. (See "Technically, Airlines Look Good.")