Merrill Lynch upgraded Delta Air Lines (DAL) and Alaska Air (ALK) to near-term accumulate and upgraded Atlantic Coast (ACAI) to long-term buy from accumulate.
Analyst Michael Linenberg says he's encouraged by government steps to bolster the airline industry's financial condition and enhance airport safety. Still, if passenger travel stays as is, more capacity cuts are likely. He thinks the near term also may be adversely impacted by more video-conferencing and corporate jet usage. He sees a $6.5 billion 2001 revenue loss, and a $3.5 billion 2002 loss. Linenberg suggests investors focus on carriers with the best balance sheets and ample liquidity (e.g. Alaska Air and Delta), and defensive players like Atlantic Coast.