Airline shares rise after fiscal cliff deal
Fiscal cliff deal boosts airline shares, as investors see profits in tight supply of seats
NEW YORK (AP) -- Airline shares rose Wednesday with the broader market, after Congress passed a compromise bill that avoids the so-called fiscal cliff.
The airline business tends to track the economy, and economists said that going over the fiscal cliff would have dragged the country back into recession.
In a Dec. 10 note, analyst Daniel McKenzie listed the fiscal cliff among his "key industry risks" for 2013.
Airlines were already planning to shrink in the first quarter. By McKenzie's tally, the 10 biggest airlines are cutting the number of seats they'll offer in January by a half-percent. The major U.S. airlines have also said that flying capacity — a different measure — will fall during the first quarter.
If seats are hard to come by, airlines can charge more. Airlines generally should have better pricing power in 2013, McKenzie wrote.
Shares of United Continental Holdings Inc. rose 73 cents, or 3.1 percent, to $24.11. Delta Air Lines Inc. was up 30 cents, or 2.5 percent, to $12.17. US Airways Group Inc. rose 31 cents, or 2.3 percent, to $13.81 and Southwest Airlines Co. rose 15 cents to $10.39.
