UAL leads Airline Index toward longest gain in decade

United Airlines parent UAL Corp. led the Bloomberg U.S. Airlines Index toward its longest climb as increased travel demand signaled the worst of the industry's slump has ended.

UAL rose 79 cents, or 19 percent, to $5 at 4 p.m. in Nasdaq Stock Market trading, the biggest climb since Feb. 23. The airline pulled the group of 12 carriers up 4 percent for its ninth straight gain, the most since its creation in June 1999.

Traffic on UAL's main jet operations slid 6.5 percent for July, the smallest drop in 11 months, as fare sales enticed vacationers to fly. Chicago-based UAL said its planes were 2.7 percentage points more full on that basis in July as it cut available seats by 9.4 percent.

"There's generally broader optimism on the economy," said Hunter Keay, an analyst at Stifel Nicolaus & Co. in Baltimore. "UAL is a good cyclical play on the economy. It's not as risky as some, but still risky enough to give a better comfort level in the shift" toward economic recovery.

The biggest U.S. airlines have posted traffic declines for 13 straight months amid the worst slump since 2001-02 as business travel plunged in the recession.

Continental Airlines Inc.'s traffic, as measured in miles flown by paying passengers, fell 3.4 percent in July. The Houston-based carrier said yesterday that revenue for each seat flown a mile fell no more than 18.5 percent, the best results since April.

"Investor expectations are in the process of bottoming," William Greene, an analyst at Morgan Stanley in New York, wrote today in a note to clients.