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Analyst William Greene said in the past he has written that amid the current macro backdrop airlines would not become attractive investments until the industry reaches a tipping point, or when "extremely bearish" fundamentals trigger broad, acute financial distress and restructuring. However, after updating its estimates for current oil prices ($115 per barrel and a $25 per barrel crack spread), Morgan Stanley said the probability of a tipping point event in 2009 has decreased.
For 2009, Morgan Stanley now forecasts profit of $1.26 a share for Continental Airlines Inc., profit of 25 cents a share for Delta Air Lines Inc., profit of 15 cents a share for JetBlue Airways Corp., profit of 42 cents a share for Southwest Airlines Co., profit of 32 cents a share for Northwest Airlines Corp., and profit of $2.78 a share for UAL Corp.
The brokerage said it expects "significant," upward revisions to consensus estimates in the near-term as its revised estimates are well above consensus.
Shares of UAL Corp. jumped 1.5% to $11.31, shares Delta Air Lines gained 1.1% to $9.22, shares of JetBlue increased 22 cents to $5.68, and shares of Northwest Airlines rose 3 cents to $11.25.
Meanwhile, shares of Southwest Airlines slipped 10 cents to $15.71, shares of Continental Airlines fell 2 cents to $16.43, and shares of AMR Corp. slid 4 cents to $11.20. Casey Logan cl/tk1
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