Airline Stocks Starting to Take Off

It’s taken nearly half a year, but the stock prices of the nation’s largest airlines are finally returning to their pre-Sept. 11 altitude.

Buoyed by reports of fewer empty seats and predictions from some carriers that revenues are improving, shares of Northwest Airlines Corp. (ticker symbol: NWAC) and American Airlines parent AMR Corp.(AMR) inched toward their Sept. 10 closing prices Monday, and Delta Air Lines Inc. (DAL) surpassed the mark.

The Dow Jones transportation average, which tracks the broader sector, soared more than 5%.

Southwest Airlines Co. (LUV), the only major carrier to report a fourth-quarter profit in 2001, transcended its pre-Sept. 11 levels in November.

The firm said Monday, though, that it couldn’t be sure of a first-quarter profit in 2002, blaming two consecutive months of declining passenger traffic.

Major carriers are still in a funk based on year-to-year comparisons, but the majority have made month-to-month progress in luring back travelers--and Wall Street is latching on to any positive news it can find in this troubled sector.

Salomon Smith Barney analyst Brian Harris called the industry’s performance in February “encouraging”; Merrill Lynch analyst Michael Linenberg said he was “pleased by the improvement.”

Despite Wall Street’s optimism about the gradual industry turnaround, most carriers continue to lose money.

One carrier that has predicted a first-quarter profit is Houston-based Continental Airlines Inc. (CAL). Continental’s passenger traffic declined 6.7% in February compared with a year ago, but that was less than January’s year-over-year decline.

It also marked an increase in traffic compared with October, the first full month of travel after the attacks.

The positive reception of Continental’s February data pushed the stock up $2.10 on Monday to $34.80. Although Continental’s shares remain lower than their Sept. 10 close of $39.64, the carrier’s positive news sent shares of other airlines substantially higher.

Delta, the third-largest airline, rose $2.42 to $38.59, above its Sept. 10 closing price of $37.25.

AMR climbed $1.80 to $29.05, and Northwest rose $2.04 to $19.08--both near their Sept. 10 closing prices.

Associated Press

Lawsuits Oppose Sabre’s Bid for Travelocity

Travelocity.com Inc. said Monday that 11 shareholder lawsuits were seeking to block Sabre Inc.’s bid to buy the online travel company.

The lawsuits claim the Sabre offer of $23 a share is too low, Travelocity said.

Sabre (TSG) owns 70% of Travelocity (TVLY). It said Feb. 19 that it would launch a tender offer for the other 30% today or soon after.

Nine of the lawsuits were filed in the Delaware Court of Chancery, and two were filed in state district court in Fort Worth, where Travelocity is based.

Travelocity said it had formed a special committee of outside directors to evaluate Sabre’s bid.

Travelocity shares rose 73 cents to $26.60, and Sabre shares jumped $2.74 to $48.04.

Associated Press