U.S. airline shares jump on hopes worst soon over=20 =20 Friday May 2, 11:50 AM EDT=20 CHICAGO, May 2 (Reuters) - Shares of large U.S. airlines jumped on Friday, led by a 23 percent gain in Continental Airlines Inc. (CAL), as analysts said the worst of the downturn may soon be over though huge losses will continue. The American Stock Exchange airline index rose 11 percent, far outpacing 1 percent gains in the Dow Jones industrial average (DJI) and the Standard & Poor's 500 Index (SPX). Continental was one of the top percentage gainers on the New York Stock Exchange, jumping $2.29 to $12.15. American Airlines parent AMR Corp. (AMR) rose 18 percent to $5.70 and Northwest Airlines Corp. (NWAC) rose 20 percent to $10.25. "Although the industry has a ways to go before it is healthy again, it appears that the worst may be over for the airlines," Merrill Lynch analyst Michael Linenberg said in a note. Merrill Lynch on Friday raised its rating on Delta Air Lines Inc. (DAL), Northwest and Continental to "buy" from "neutral." They are the third, fourth and fifth largest U.S. air carriers respectively. It also raised its rating on Alaska Air Group Inc. (ALK) and low-cost carrier Frontier Airlines Inc. (FRNT) to "buy" from "neutral." Delta shares rose 14 percent to $14.85, Alaska Air shares rose 10.6 percent to $19.59 and Frontier shares rose nearly 15 percent to $7.19. U.S. airlines have reported billions of dollars in losses since the Sept. 11 attacks, including bankrupt United Airlines parent UAL Corp. (UALAQ) posting a $1.3 billion quarterly loss on Friday. Airlines have been hurt in recent weeks by the war in Iraq and the pneumonia-like virus SARS, or Severe Acute Respiratory Syndrome. The war hit U.S. airlines hardest on trans-Atlantic routes, while SARS has hurt trans-Pacific travel the most. Linenberg said he still expects U.S. airlines to report net losses of $8.2 billion in 2003, and $2.5 billion of losses in 2004, further overextending debt-laden balance sheets. Also, late Thursday Continental said unit revenue was flat to down 2 percent in April from a year earlier, better than expected by some analysts given the war and SARS. Continental is the only major airline that consistently reports monthly unit revenue estimates, which are considered a rough proxy for industry results released later in May. "Given the end of the Iraqi war, and barring potential impact of heightened SARS fears in the U.S., we believe total industry unit revenues have bottomed out ...," Credit Suisse First Boston analyst Jim Higgins said in a note. SARS will likely keep Pacific revenue soft at least two more months, most affecting UAL and Northwest, Higgins said.=20 =A92003 Reuters Limited.=20 RELATED QUOTES SymbolLast TradeChange DAL=20 14.78=20 +1.78=20 NWAC=20 10.25=20 +1.70=20 AMR=20 5.60=20 +0.79=20 FRNT=20 7.24=20 +0.98=20 CAL=20 11.91=20 +2.05=20 UALAQ=20 1.29=20 +0.10=20 Enter one or more symbols =20 Quotes delayed up to 20 minutes.=20 Click here to email this page