United Leads Airlines to Best Week Since July on Profit Outlook

  • Carrier's rally follows investor update on earnings, margin
  • American buyback in quarter exceeds analysts' expectations

United Continental Holdings Inc. led U.S. airlines toward their biggest weekly rally in three months, boosted by earnings outlooks that exceeded forecasts.

“We think the September quarter results are very good, especially when you compare airline profit margins and returns to other industrial sectors,” Deutsche Bank AG analyst Michael Linenberg said in a report dated Thursday. He said he expects U.S. airline profits of $7.3 billion in the period to dwarf the $5 billion earned a year earlier.

The stock surge followed an investor update late Thursday from United, which predicted it would report a record quarterly pretax profit and a pretax profit margin of 16 to 17 percent in the third quarter, up from a forecast of 13.5 percent to 15.5 percent. On Friday, American Airlines Group Inc. narrowed its pretax-profit margin forecast and said it had repurchased at least twice as many shares last quarter than analysts had been expecting.

The Bloomberg U.S. Airlines Index was up 4.8 percent for the week at 11:37 a.m. in New York, the biggest climb since July 10 for the gauge of 11 carriers. United paced gains for the day and was headed for its biggest weekly jump since January.

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