Sector Snap: Airline shares gain again

Airlines shares climbed Thursday, as an industry group said airline passenger declines may be leveling off.

The AMEX Airline Index rose 3.9 percent at midday, with all 13 component stocks on higher ground.

Crude oil was up 95 cents at $69.62 a barrel. Jet fuel is one of the airlines' biggest expenses.

The International Air Transport Association said international scheduled traffic in May fell 9.3 percent compared to May 2008. Passenger demand in April was down 3.1 percent. In March it was off 11.1 percent from the year before.

"Although the impact of the recession appears to be stabilizing, strong headwinds from debt and low asset prices are expected to weaken and delay any significant recovery," IATA said in a statement.

Meanwhile, Fitch Ratings downgraded the debt ratings of Delta Air Lines and wholly owned subsidiary Northwest Airlines. Both carriers' Issuer Default Rating remains "highly speculative, dropping to "B-" from "B."

"Despite large 2009 cost savings driven by the sharp decline in jet fuel prices from last summer's peak, Fitch expects DAL to report another year of substantially negative free cash flow in 2009 as the airline struggles to adjust capacity to a diminished level of demand," the ratings agency said.

The downgrade did not seem to worry investors. Delta shares rose 39 cents, or 7.1 percent, to $5.92. AMR Corp., parent of American Airlines, rose 27 cents, or 6.8 percent, to $4.22. Continental Airlines added 53 cents, or 6.3 percent, at $8.90. US Airways gained 15 cents, or 7 percent, at $2.30.UAL Corp., parent of United Airlines, rose 31 cents, or 9.8 percent, to $3.48.

Southwest Airlines added 28 cents, or 4.4 percent, at $6.59. Alaska Air gained $1.13, or 6.8 percent, at $18.83. AirTran rose 42 cents, or 7.8 percent, to $5.84. JetBlue Airways picked up 17 cents, or 4.3 percent, at $4.14. SkyWest rose 31 cents, or 3.2 percent, to $10.08.