Despite Hard Times ... Airline Bulls Surfacing (JBLU, UAL, LUV, LCC, DAL)

Oil had a really dismal May, losing roughly 17% and hitting under $87.00 per barrel for WTI Crude on Thursday. While this may not be good for oil barons, the airline industry is getting a virtual Nirvana out of this. Have you flown from a major city to another major city lately? If so, you probably noticed that the planes are full. Now the question is whether or not the U.S. will follow Europe into the financial recession. Two analysts are less and less worried about at least part of the sector.

JetBlue Airways Corporation (NASDAQ: JBLU) has been on fire and shares rose handily on news that it is going to get to expand JFK Terminal 5, meaning room for more flights to more destinations. Shares were up 9.9% at $5.23 against a 52-week range of $3.40 to $6.32. Keep in mind that one director bought some $200,000 in stock recently. Its shares are up 3% at $4.40 against a 52-week range of $3.40 to $6.32 in part on follow-on buying after a director of the company bought more than $200,000 worth of stock. But today saw two other boosts on positive analyst calls from CRT and from UBS. UBS raised JetBlue to a Buy rating, while CRT Capital raised its target to $10 from $8 as it raised 2012 and 2013 estimates due to falling fuel costs.

United Continental Holdings, Inc. (NYSE: UAL) found some love as well with shares rising 4% to $25.17 against a 52-week range of $15.51 to $25.84. These kind fellows found room to slash another 1,300 jobs in Houston today after rival Southwest Airlines Co. (NYSE: LUV) won a City Council vote on Wednesday which will allow Southwest to add international flights from Houston. Southwest Airlines saw its shares rise by 1.8% to $9.03 and its 52-week range is $7.15 to $11.71.

US Airways Group, Inc. (NYSE: LCC) is now reportedly the leading candidate to jointly bid for the bankrupt AMR Corp. along with private equity giant TPG. Its stock rose over 4% to $13.22 on the day. Keep in mind that AMR just reported a $15 million loss in April, but its cash cushion was said to be $4.8 billion.

Delta Air Lines Inc. (NYSE: DAL) rose just shy of 3% to $12.10, and Delta hit a new 52-week high of $12.25 compared to its prior 52-week range of $6.41 to $12.00.

Another boost came from Imperial Capital, which effectively gave upside targets of $19 on Delta (versus $12.10 today), $20 on US Air (versus $13.22 today), and $32 on United/Continental (versus $25.17 today).

The question that we think has to be asked is how the demand for air flights after the summer and going into the end of 2012. We have seen three reports calling for better times for airlines ahead.

JON C. OGG