This Imminent Merger Is Moving Airline Stocks Now

“We believe an LLC-AMR merger may be imminent,” said an analyst at JPMorgan on Tuesday. “We expect LLC-AMR merger to happen — the problem is so does everyone else.”

The long courtship of American Airlines by US Airways (NYSE:LCC) has been no secret. Speculation has been building for months, and earlier in January American Airlines CEO Tom Horton sent a letter to employees saying that the whole ordeal will be decided, one way or another, in a matter of weeks.

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For its part, AMR Corporation (AAMRQ.PK), the parent company of American Airlines, announced full-year 2012 revenue of $24.9 billion, the highest in company history. This is a good omen for a company currently in the throws of bankruptcy, which still logged a 2012 net loss of $1.9 billion, despite the revenue boost. However, excluding reorganization and special items, the company’s net loss comes to just $130 million, an even more encouraging number.

Once the top carrier in the U.S., American Airlines has been reduced to a relatively minor player when compared against major competitors. US Airways, also small compared to those same competitors, hopes that a merger would provide valuable synergies. The carrier has performed phenomenally well over the past 52 weeks — shares are up 143 percent for the period — but believes that a combined entity would be more competitive.

However, given its tremendous year-long rally, analysts think that any upside from the merger could already priced in.

US Airways Group, Inc. New US A Stock Chart - LCC Interactive Chart - Yahoo! Finance

Delta Air Lines (NYSE:DAL)

In the same JPMorgan note predicting the American Airlines and US Airways merger, the analyst recommended buying into Delta, currently rated at “Overweight.”

“Given LCC and UAL may spike on a potential deal,” said the analyst, “we suggest investors be poised to take profits and buy Delta.” The stock traded up 2.5 percent on Wednesday, hitting a new 52-week high of $14.11 before simmering back down below $14.00.

Delta Air Lines Inc. (New) Comm Stock Chart - DAL Interactive Chart - Yahoo! Finance

JetBlue Airways (NASDAQ:JBLU)

Not to be left out, JetBlue is getting a lot of love from investors on Wednesday. At the end of last week, the airline reported strong December traffic, which is likely contributing to the mid-week surge.

JetBlue reported that revenue passenger miles and available seat miles both grew 6.1 percent year over year in December. Year-to-date figures grew 9.3 percent and 7.6 percent, respectively. This compares favorably to airlines like US Airways, which logged a 1.3 percent year-over-year increase in revenue passenger miles, and a 0.2 percent decrease in available seat miles.

JetBlue Airways Corporation Stock Chart - JBLU Interactive Chart - Yahoo! Finance

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