An airline exchange traded fund has fallen sharply on global growth jitters but is looking for a rebound as a major holding reports quarterly results.
United Continental (NYSE: UAL) is anticipated to report a healthy third quarter profit, possibly boosting the airline ETF.
The beaten-down fund also stands to benefit from any signs the economic picture is brightening.
“Real GDP may be revised up slightly. More importantly, however, another gain in durable goods orders is possible, given strong aircraft orders, in a further sign that third quarter economic growth should be positive and may well be stronger than growth in the first half of the year,” David Kelly, Chief Market Strategist for JP Morgan Funds, wrote in a weekly outlook.
The $17.3 million ETF, Guggenheim Airline ETF (NYSEArca: FAA), counts United as its second-largest holding at nearly 17% of the fund.
The ETF is down almost 21% for the year, due to a slowdown in the global economy and higher fuel prices. [Airline ETFs In Tailspin]
The Chicago-based airline is expected to post a $1.4 billion profit, with a $8.4 billion cash reserve, and a credit upgrade from Fitch Ratings earlier this month, reports Susan Carey and Jack Nicas for The Wall Street Journal.