Industry Group Hikes 2010 Airline Profit Forecast (CAL, LCC, UAUA, DAL, ZNH)

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AIRLINE INVESTING IDEAS

• Popular long ideas: LUV, AAMRQ, DAL
• Popular short ideas: AAMRQ, UAL, DAL
• Top dividend plays: DAL, SKYW, LUV
• Pro favorites: DAL, UAL, LCC

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AIRLINE COVERAGE

These companies transport people around the world by air

• Airlines Take Off As Oil Falls (AMR, UAL, RJET, DAL, JBLU)
• Airlines Find Friendly Skies As Oil Continues To Plunge (DAL, AMR, JBLU, LCC, LUV, ALK, UAL, GOL, TAM, ZNH)
• Airlines Fly Higher As Oil Is Grounded Again (DAL, UAL, AMR, LUV, GOL, ZNH, CEA)

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AIRLINE METRICS

Avg. Market Cap:	$4.8B
Avg. P/E Ratio:	15.1
Avg. Div Yield:	0.2%

Airline stocks took off on Tuesday after the International Air Transport Association more than tripled its 2010 industry earnings outlook to $8.9 billion from the $2.5 billion June forecast. The association noted that the airline recovery has been stronger and faster than anyone expected, but airline earnings could slide by more than -40% in 2011.

According to coverage by Bloomberg, IATA CEO Giovanni Bisignani said, “This year is as good as it gets in the cycle,” and “the real question is how long we see the recovery lasting.” The group expects next year’s airline net income to total $5.3 billion as firms increase capacity faster than demand will justify.

As a whole, the Airline Stocks Index is ahead by 1% today as Continental Airlines (CAL), US Airways Group (LCC), and United parent UAL Corporation (UAUA) gain 3% or more.

At the end of the second quarter, UAL was the most popular airline stock among Pro investors, with 23 13F-filing asset managers counting shares among their top-15 U.S.-listed equity positions. Delta Air Lines (DAL) was runner-up with 18 Pros by the same criteria, while Continental and U.S. Airways both had more than ten.

China Southern Airlines (ZNH) and Delta are the sector’s top performers over the last month, gaining 14% respectively, and as of this writing, seven Airline Stocks Index components are ahead by 10% or more for the period. Investors can track the Index for performance trends and a suite of other metrics at tickerspy.com.

Tags: CAL, DAL, LCC, UAUA, ZNH