Majestic Research

Bloomberg

FMR Increases Stakes in UAL Corp., US Airways Group

By Mary Schlangenstein
Published: September 10, 2007

FMR Corp., parent of mutual-fund company Fidelity Investments, tripled its stake in United Airlines parent UAL Corp. and almost doubled its holdings in US Airways Group Inc. as those carriers fly fuller planes.

The additions make FMR the second-largest owner of UAL shares, behind Bank of America, with 11 percent, according to data compiled by Bloomberg. FMR, which disclosed the stakes in U.S. regulatory filings today, said it has 15 percent of Tempe, Arizona-based US Airways, remaining the biggest holder.

United and US Airways have reported increased traffic, in miles flown by paying passengers, and fewer empty seats on their planes through August. Some airlines have slowed U.S. capacity growth by dropping routes made unprofitable by higher fuel prices, said Matthew Jacob, a New York-based analyst at Majestic Research. That, in turn, is boosting earnings.

“Their strategy for now appears to be paying off on the revenue side,” Jacob said in an interview. “Instead of expanding rapidly, they are being more targeted.”

United’s percentage of seats filled reached a record 86 percent last month as the Chicago-based carrier reduced capacity 1 percent from a year earlier. US Airways’ rate of seats filled excluding its regional flights rose to 85 percent from 80 percent a year earlier, as the airline trimmed capacity 1.9 percent.

FMR raised its holdings in Chicago-based UAL from 3.8 percent, according to the Bloomberg data. The stake in US Airways increased from 8.2 percent. FMR said it held 13.8 million shares of US Airways and 13 million of UAL.

No Comment

Sophie Launay, a spokeswoman for Boston-based FMR, declined to comment on the stock purchases.

US Airways shares have fallen 45 percent this year, while UAL’s have increased 1.5 percent.

“We are thrilled to see FMR increase their stake in US Airways,” said Dan Cravens, a spokesman for the carrier. “They are a fantastic firm and a great shareholder for our company.”

In July, FMR disclosed that it had sold 32 percent of its stake in US Airways at that time, dropping its holdings to 8.6 percent from 13 percent.

Jean Medina, a spokeswoman for UAL, said the company doesn’t comment on investors.

FMR in a third regulatory filing said it cut its investment in AirTran Holdings Inc. to 6.31 million shares, or 6.8 percent, from 7.25 million, or 7.9 percent. The change drops FMR from the second-largest shareholder of the Orlando, Florida-based company to the third, behind Wellington Management Services and Farallon Capital Management, according to the Bloomberg data.

AirTran spokesman Dave Hirschman declined to comment on FMR’s action.

UAL’s shares declined 3 cents to $44.65 at 4 p.m. in Nasdaq Stock Market composite trading, while US Airways’ fell 30 cents to $29.51 and AirTran’s dropped 28 cents to $10.11.