Airline shares traded mixed Monday as the broader market rallied and oil prices wavered following a sharp run-up last week.
The Amex Airline Index gained 0.5 percent to 22.77 at midday. Broader indicators rose more sharply after a new report suggested that the economy is likely still growing. The Dow Jones industrial average jumped more than 100 points, rising 1 percent to 13,114.55.
Oil prices wavered after finishing last week at record highs above $125 a barrel. Light, sweet crude for June delivery rose 6 cents to $126.35 a barrel on the New York Mercantile Exchange late Monday morning, but occasionally dipped into negative territory.
Airline stocks are sensitive to movements in the energy markets because fuel represents one of the industry's biggest costs.
JPMorgan analyst Jamie Baker predicted the industry's fuel cost will jump $17.5 billion over last year, leading to a record loss of $7.2 billion.
"A war of attrition appears to be under way. One belief is that airlines will act collectively to massively reduce capacity, leading to near-record fare improvement," Baker wrote in a client note. "But reality suggests managements may instead engage in value destructive behavior as they attempt to merely outlast one another."
Baker raised his ratings on Alaska Air Group Inc. and JetBlue Airways Corp. to "Neutral" from "Underweight," citing their "better-than-average forecasted survival prospects." He also cut his rating on Continental Airlines to "Underweight" from "Neutral."
Alaska shares climbed 62 cents, or 2.9 percent, to $22.01. JetBlue shares jumped 16 cents, or 3.3 percent, to $5.04. Continental shares fell 42 cents to $17.54.
Among other airlines, American Airlines parent AMR Corp. fell 8 cents $9.09, while United Airlines parent UAL Corp. fell 36 cents to $13.45.
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