Fidelity Boosts Its Airline Stock Holdings

Fidelity Investments is taking a flier on airline stocks.

The world’s largest mutual fund company said in regulatory filings this week that it owned 12 million shares of United Airlines parent UAL Corp. and sharply boosted its holdings in American Airlines parent AMR Corp. in recent months.

Fidelity’s 13% stake in UAL makes it the biggest investor in the nation’s No. 2 carrier, which emerged from bankruptcy protection in February after three years in Chapter 11. Fidelity also is the biggest investor in AMR, with a 13% stake. American is the world’s largest airline based on passenger traffic.

The filings didn’t say in which funds the shares were held.

Fidelity raised its airline stakes as the industry cuts costs and boosts ticket prices.

“The revenue environment is improving” for airlines, said Benchmark Co. analyst Helane Becker in New York. “They’ve been raising fares and the fare increases have been holding.”

American last week followed United and other carriers in raising some one-way fares $50 to cover higher fuel costs. Late Tuesday, American announced a $10 one-way fare hike on most overseas flights, citing fuel costs.

“The fuel side of the equation is still worrisome,” Becker said.

Airline stocks have suffered in recent days as oil prices have climbed to levels not seen since Hurricane Katrina. An index of 10 big airline stocks has fallen almost 7% in the last four trading sessions, although it is up 34% from its low in September.

On Tuesday, UAL rose 54 cents to $38.30; AMR fell 3 cents to $25.67.