Battered airline stocks have soared in recent months despite industry analysts' warnings that major carriers are more than a year away from profitability.
Aggressive cost-cutting coupled with added revenue from U.S. military contracts benefited the industry during the second quarter which ends Monday, leading some analysts to conclude that losses for the period will be narrower than previously expected.
The fact that American Airlines avoided bankruptcy, at least for the time being, is another reason why industrywide forecasts have been sunnier lately.
Still, a very important segment of airline customers has yet to return in full force: business travelers. Without them, analysts say, major carriers cannot really mount a rebound.
J.P. Morgan airline analyst Jamie Baker Thursday reduced his industrywide loss estimate for the second quarter from $1.2 billion to $950 million. However, he said "the fact remains there's little if any evidence to support the theory that the hibernating business traveler is starting to stir."
For that reason, Baker concluded, "near-term equity values have pulled ahead of fundamentals."
The Dow Jones Airlines Index, which tracks shares of 37 airlines, has climbed nearly 50 percent since late March, outperforming the broader market rally over the same period.
Shares of AMR Corp., the parent company of American Airlines, have risen more than 400 percent since April 1. They were up 42 cents Friday, closing at $11.32 on the New York Stock Exchange.
Delta's stock price has risen 70 percent over the same period, while Continental's has gained 190 percent. Shares of Delta rose 1 cent to close at $14.99 on Friday, while Continental's were down 35 cents to close at $14.90.
The rationale behind much of this buying has been that share prices are at historical lows.
Goldman Sachs airline analyst Glenn Engel's explanation for a "buy" rating on AMR's stock is a case in point.
"Despite quadrupling in price," Engel said in a recent report, "AMR's stock price remains 50 percent below both its year ago levels and it's post-9/11 lows." He also said that the number of customers paying "full fare" - a reference to business travelers - is on the rise for the first time in three years.
But Blaylock & Partners analyst Ray Neidl cautions that, overall, airline ticket pricing is "very weak" and that talk of potential bankruptcy filings could re-emerge after Labor Day depending on airfare and passenger traffic levels.
Industrywide, domestic fares were 4 percent lower in May compared with last year, at $118.73 each way for a 1,000 mile trip, according to the Air Transport Association.
Carriers have used cheap tickets to stimulate travel and in order to stay competitive with low-cost competitors, such as Southwest Airlines and JetBlue.
For example, American Airlines on Thursday announced that it would cap one-way fares at $299 between New York and San Diego, a route on which it competes with JetBlue. In April, Delta launched Song, a low-fare airline that competes with JetBlue and AirTran on select East Coast routes.
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