(Recasts; adds details)
Aug 28 (Reuters) - Lehman Brothers raised its price target on shares of nine U.S airlines, including Delta Air Lines (DAL.N), Northwest Airlines NWA.N, UAL Corp UAUA.O and JetBlue Airways (JBLU.O), and said a recent rally of the shares does not sufficiently reflect the magnitude of change developed in the combination of lower energy prices and a favorable capacity outlook.
"We see substantial upside potential, even from current levels," analyst Gary Chase said in a note to clients.
Chase, who expects the airline industry to be profitable during 2010, also believes capacity and liquidity issues are both better than market anticipations.
The analyst also narrowed his 2008 loss estimates on nine airline stocks, citing lower fuel prices combined with a better-than-expected capacity outlook for the industry.
He raised his 2008 profit outlook on Southwest Airlines (LUV.N).
The following are the price target and 2008 estimate changes by Lehman Brothers on the U.S. airline stocks:
(in $) Price Target FY Estimates
Company Name Current Previous Current Previous
Air Tran Holdings AAI.N 4.50 4.00 -1.23 -2.13
Alaska Air Group (ALK.N) 28.00 17.00 -0.13 -3.28
AMR Corp AMR.N 22.00 7.50 -5.70 -10.88
Continental Airlines (CAL.N) 22.00 9.50 -2.04 -7.35
Delta Airlines (DAL.N) 18.00 8.50 -1.05 -3.25
JetBlue Airways (JBLU.O) 9.00 5.50 -0.27 -0.72
Northwest Airlines NWA.N 19.00 10.00 -0.99 -3.74
UAL Corp UAUA.O 26.00 16.50 -6.76 -18.25
US Airways Group LCC.N 12.00 4.00 -6.45 -12.70
Southwest Airlines (LUV.N) Unchanged at 11.00 0.53 0.15 (Reporting by Arup Roychoudhury in Bangalore; Editing by Pratish Narayanan)