Sector Snap: Airlines

Shares of airlines rise on investor optimism about growth prospects, lower costs

Associated Press

NEW YORK (AP) -- Airline stocks rose Wednesday on investor optimism that the industry is ready to rake off.

Delta Air Lines Inc. President Ed Bastian said in a presentation to analysts that non-fuel costs would rise less than expected in the second quarter. Lower fuel prices will help profit margins, he said.

Bastian said Delta is on track for "a very, very strong second quarter, and our outlook for the summer is quite solid, as well."

Meanwhile Southwest Airlines Co. said it will delay delivery of new airplanes and fill the gap with used planes to reduce spending over the next five years. It's also raising its dividend and could soon buy back more of its own shares.

Southwest will delay 30 firm orders for Boeing 737 jets, which CEO Gary Kelly said would cut capital spending through 2018 by more than $500 million. The airline is also giving up or delaying options for additional planes.

Southwest is raising the quarterly dividend due on June 26 to 4 cents per share, up from a penny per share. It's also boosting share-buyback authority to $1.5 billion from $1 billion.

Here's how shares of some airlines were trading Wednesday afternoon:

— Delta, up 60 cents, or 3.3 percent, to $18.85.

— Southwest, up 35 cents, or 2.5 percent, to $14.33.

— AMR Corp., up 53 cents, or 9.2 percent, to $6.32.

— U.S. Airways Group Inc., up 61 cents, or 3.4 percent, to $18.71.

— Spirit Airlines Inc., up 31 cents to $28.56.

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