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UBS Warburg Downgrades Three Airlines


UBS Warburg downgraded its investment rating on AMR Corp. (AMR) to buy from strong buy. It also lowered its recommendations on Delta Air Lines (DAL) and Southwest Airlines (LUV) to hold from buy.

Analyst Samuel Buttrick says that airline industry fundamentals are improving, but remain far from good, as they could only improve following the September 11 terrorist attacks. He notes that airline stocks have risen 80% from post-attack lows. Buttrick thinks it is okay now to take some money off the table, so he downgraded AMR, Delta, and Southwest. The move indicates that the "once in a decade" buying opportunity in airlines is over. While the industry could post modest profits in 2003, with some companies profitable -- and others still loss-making -- the analyst believes 2004 likely remains first year for airline earnings to be good.


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