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United and American Lead Airline Shares to Two-Month High
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United and American Lead Airline Shares to Two-Month High

U.S. airlines climbed to a two-month high after beleaguered United Continental Holdings Inc. won support from one of its biggest shareholders and American Airlines Group Inc. signaled that it"™s gaining additional control over fares.

United shares could jump to $135 by 2020, or even higher under certain circumstances, said Brad Gerstner, chief executive officer of Altimeter Capital Management. Altimeter holds 3.3 percent of the carrier"™s stock, the hedge fund"™s top holding, and helped lead a proxy fight that overturned part of the airline"™s board last year.

"You have to believe the historical skepticism which has been pounded into most financial analysts for decades is too negative," Gerstner said late Monday at the Sohn Investment Conference in New York.

United climbed 5.1 percent to $78.79 at 2:26 p.m. Tuesday in New York. The gain led a Bloomberg index of U.S. airlines to rise as much as 3.1 percent to 131.35, its highest intraday level since March 3. American advanced 4.5 percent to $46.95.

Gerstner"™s upbeat view followed similar support from Warren Buffett, whose Berkshire Hathway Inc. is United"™s top shareholder.

The airline made a "terrible mistake" when it allowed a Chicago airport officer to pull a passenger from his seat and drag him off a plane in early April, Buffett said in an interview Monday morning on CNBC. The billionaire said the incident wouldn"™t change his investment strategy, however. Berkshire reversed course on the airline industry last year, taking stakes in the four biggest U.S. carriers…

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