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Continental Airlines (NYSE: CAL) is seeking immunity from antitrust laws to work more closely with United Airlines (NASDAQ: UAUA) and others on international routes. And, since airlines operate in a state of seemingly perpetual turmoil, what's the harm? According to the Justice Department: plenty.

The airline sought broad immunity as part of an effort to join Star Alliance, which includes US Airways, Lufthansa (OTC: DLAKY), and Air Canada -- along with United. Continental believes that it needs to join Star Alliance in order to remain competitive, especially with airlines that have this type of immunity already.

The U.S. airline sector, to say the least, has not offered investors any excitement lately.

The flat-to-declining number of travelers, intense competition, and yet another battle with sky-high fuel prices in 2008 have created an environment that's ripe for further industry consolidation, and sluggish share price gains.

Even so, selected entry points are possible, for high-risk investors only. AMR Corporation (NYSE: AMR), parent company of American Airlines, is one. Here's why:

AMR Corp (NYSE: AMR) closed at $5.20. WTI Crude oil is recently up 1.57% to $67.16 according to Bloomberg. AMR July and November option implied volatility of 94 is below its 26-week average of 115, according to Track Data, suggesting decreasing price movement.

UAL Corp (NASDAQ: UAUA) closed at $5.29. UAUA July option implied volatility is at 102, December is at 111; below its 26-week average of 128, according to Track Data, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

What more could go wrong for airlines, right? The swine flu outbreak has reminded some investors of the SARS epidemic in Asia, and it has taken its toll on airlines. With the Mexican government closing schools and stores because of a public health emergency, we await a worldwide reaction. With fears of human-to-human transmission of the disease, no doubt we are going to see airlines suffer again.

Swine flu cases have reached as far as New Zealand, and cases were found in Spain, America and Canada, In the country of origin, Mexico, there have also been deaths, making this a worldwide outbreak. These concerns resulted in battered airline stocks in foreign trading. In Chinese trading, Air France KLM, Deutsche Lufthansa, British Airways, and Iberiea were all more than 7% lower. Cathay Pacific and Air China were both sharply lower as well.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Abbott Laboratories (NYSE: ABT) Q1 profit edged past expectations despite lower sales of Humira.
• AMR Corp. (NYSE: AMR) posted a smaller-than-expected Q1 loss, sending shares sharply higher.
• Baxter International Inc. (NYSE: BAX) reported better-than-expected Q1 earnings, sending share higher.
• BP (NYSE: BP) and other oil companies were downgraded due to higher environmental costs.
• Charles Schwab Corp. (NASDAQ: SCHW) Q1 earnings declined but still topped analysts' expectations.
• Chevron Corp. (NYSE: CVX) said Q1 earnings would be lower due to a weaker dollar and lower oil prices.

AMR Corp (NYSE: AMR) closed at $4.16. AMR is scheduled to report Q1 EPS on April 15. WTI Crude oil is recently up 2.51% to $50.62 according to Bloomberg. AMR April and May option implied volatility is at 133, August is at 128; near its 26-week average according to Track Data, suggesting non-directional price movement.

Delta Air Lines (NYSE: DAL) closed at $6.91. DAL is expected to report Q1 on April 21. DAL May option implied volatility is at 108; June is at 114; below its 26-week average of 122, according to Track Data, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Singapore Airlines is one of the most successful carriers in the world. Because of the size of its home company, most of its flights are international. Several large U.S. airlines, including AMR (NYSE:AMR) and UAL (NASDAQ:UAUA) rely heavily on their overseas routes for large amounts of their profits. The yield-per-passenger is often better on flights going outside the U.S. than those within American borders.

Singapore Air is grounding a number of its planes as demand for international travel collapses. According to the AP, "The carrier said it will reduce capacity by 11 percent between April and March 2010 from the previous twelve months and decommission 17 aircraft after air cargo shipments fell 20 percent recently." Flying cargo is a separate profit center for a number of large airlines. As sales in that business drop, it compounds losses brought on by falling passenger travel.

Since Singapore Air's cuts are scheduled to go into 2010, the carrier clearly believes that there will not be a short-term rise in air travel.

U.S. carrier stocks have rebounded some from summer lows because of the drop in jet fuel prices. That should help their P&Ls. But if Singapore Air is a canary in the coal mine, the advantage of cheaper fuel may only help the industry so far.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Advanced Micro Devices Inc. (NYSE: AMD) reported dismal Q4 results due to lower demand.
• AMR Corp. (NYSE: AMR) reported a bigger-than-expected Q4 loss, sending shares lower.
• Check Point Software Technologies Ltd. (NASDAQ: CHKP) earnings prospects led to an upgrade.
• eBay Inc. (NASDAQ: EBAY) posted Q4 and full-year results with increased revenue due to a stronger dollar.
• Google Inc. (NASDAQ: GOOG) reported strong Q4 numbers that beat analysts' expectations.
• International Business Machines Corp. (NYSE: IBM) reported better-than-expected Q4 and 2008 earnings.
• Lockheed Martin Corp. (NYSE: LMT) posted strong Q4 results but lowered its 2009 guidance.
• Northern Trust Corp. (NASDAQ: NTRS) shares surged after posting better-than-expected earnings.
• Regions Financial Corp. (NYSE: RF) reported a huge loss due to write-downs and offered a bleak outlook.
• Societe Generale said that it expects to have broken even in the final quarter of 2008.
• Southwest Airlines Co. (NYSE: LUV) posted its second straight quarterly loss due to fuel hedging costs.
• UAL Corp. (NASDAQ: UAUA) reported a huge loss on the erosion in value of oil hedges as prices dropped.
• Usana Health Sciences Inc. (NASDAQ: USNA) posted record Q4 results despite one-time charges.

For more highlights from this week, see Apple, Microsoft, GE, Johnson & Johnson, Harley Davidson and others

AMR Corp (NYSE: AMR - option chain) stock is falling today after the company reported a fourth-quarter loss of $340 million, or $1.22 per share. Excluding one-time items, AMR lost 77 cents per share, which was worse than analysts' projections of a 73 cents per share loss. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on AMR.

This morning, AMR opened at $10.50. So far today the stock has hit a low of $7.37 and a high of $10.50. As of 12:10, AMR is trading at $8.17, down $2.29 (-21.9%). The chart for AMR looks neutral and S&P gives AMR a 3 STARS (out of 5) hold ranking.

For a bearish hedged play on this stock, I would consider a May bear-call credit spread above the $15 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in four months as long as AMR is below $15 at May expiration. AMR would have to rise by more than 82% before we would start to lose money. Learn more about this type of trade here.

AMR hasn't been above $15 in almost a year and shown resistance around $12.50 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in AMR.

IBM (NYSE: IBM), the tech bellwether, reported quarterly results Tuesday after the close, surprising analyst with a 12% rise in profit. It also forecast 2009 earnings of at least $9.20 a share, compared to analyst expectations around $8.70 a share. Shares were up about 3.9% in premarket trading.

BHP Biliton (NYSE: BHP), the largest mining company in the world, said it would lay off 6% of its global workforce or 6,000 workers as a result of production cuts. Around 550 of them will be in the U.S. Shares declined nearly a percent in premarket trading.

Ericsson (NASDAQ: ERIC), the Swedish telecom equipment maker, announced a 31% profit drop and a 23% surge in sales. It also said it would cut 5,000 jobs in the attempt to save $1.2 billion in costs in 2009. Shares gained nearly 13.5% in premarket trading.

Many companies are due to report results on Wednesday: AMR Corp. (NYSE: AMR), UAL Corp. (NASDAQ: UAUA), BlackRock (NYSE: BLK) and Coach Inc. (NYSE: COH) and after the close, Apple Inc. (NASDAQ: AAPL) and eBay Inc. (NASDAQ: EBAY).

Apple Inc. (NASDAQ: AAPL) said it expects to earn $1.06 to $1.35 per share on sales from $9 billion to $10 billion in the first quarter, but analysts seem to expect more, estimating income of $1.39 per share on $9.74 billion in revenue, according to Thomson Reuters. Meanwhile, U.S. regulators are examining Apple's disclosures about Jobs' health problems to ensure investors weren't misled, according to Bloomberg sources. Shares gained about 1.3% in premarket trading.

Analyst upgrades:

• Calyon upgraded major network carriers based on falling oil prices and capacity cuts. The analyst is positive over the next 12 months but cautious short-term given the uncertain economy, and volatile markets and oil prices. AMR Corp (NYSE: AMR) and Delta Air (NYSE: DAL) were upgraded to Add from Neutral and UAL Corp (NASDAQ: UAUA) was raised to Neutral from Reduce.
• Ryanair (NASDAQ: RYAAY) was upgraded at Citigroup to Buy from Hold.
• Boardwalk Pipeline (NYSE: BWP) was raised to Buy from Hold at Deutsche Bank.
• Cowen lifted Biogen Idec (NASDAQ: BIIB) to Outperform from Neutral.
• JP Morgan upgraded Choice Hotels (NYSE: CHH) to Neutral from Underweight following the better-than-expected Q3 report.
• Oppenheimer upgraded shares of Integra LifeSciences (NASDAQ: IART) to Outperform from Perform on valuation, the company's minimal exposure to economic conditions, and expectations for margin improvement and a rebound in organic growth.

Analyst downgrades:

• Sherwin-Williams (NYSE: SHW) and AerCap Holdings (NYSE: AER) were downgraded to Neutral from Overweight at JP Morgan.
• UBS downgraded Embarq (NYSE: EQ) to Neutral from Buy following the CenturyTel (NYSE: CTL) merger announcement.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Advanced Micro Devices Inc. (NYSE: AMD) narrowed its Q3 net loss on rising revenues.
• AMR Corp. (NYSE: AMR) posted a deeper-than-estimated Q3 loss but ordered 42 new planes.
• Citigroup Inc. (NYSE: C) reported its fourth straight quarterly loss on another write-down.
• Coca-Cola Co. (NYSE: KO) posted better-than-expected Q3 results on growth overseas.
• CSX Corp. (NYSE: CSX) reported strong Q3 results on lower fuel prices and cost controls.
• eBay Inc. (NASDAQ: EBAY) topped Q3 expectations but lowered its full-year guidance.
• Gilead Sciences (NASDAQ: GILD) beat expectations, sending shares higher.
• Google Inc. (NASDAQ: GOOG) better-than-expected Q3 results sent shares higher.
• Harley-Davidson Inc. (NYSE: HOG) international growth couldn't overcome disappointing results.
• Hershey Co. (NYSE: HSY) results in Q3 were in line with analysts' expectations.
• IBM (NYSE: IBM) posted strong Q3 results and offered an optimistic outlook.
• Intel Corp. (NASDAQ: INTC) posted strong Q3 results but warned of lower demand in Q4.
• Intuitive Surgical Inc. (NASDAQ: ISRG) strong results easily topped expectations, but shares fell.
• Johnson & Johnson (NYSE: JNJ) posted strong Q3 results and raised its full-year guidance.

Just call it a quarter of modest progress for AMR, despite the earnings per share loss.

AMR Corp., parent of American Airlines, posted a third quarter loss, excluding items, but also said it will order 42 next-generation planes from Boeing -- signaling that cost-cuts and increased efficiency may very well position the carrier for better quarters ahead.

AMR Corp (NYSE: AMR) reported a Q3 earnings per share of a loss of $1.39, excluding one-time items.

Analysts surveyed by Reuters had expected AMR to report a Q3 earnings per share loss of $1.36. AMR posted Q3 revenue of $6.4 billion. AMR's shares rose 60 cents to $9.38 in Thursday morning trading.

In the News:
Keeping Customers in a Crummy Economy
With recession expectations growing, some companies are taking extraordinary steps to hold on to customers. Telephone companies' offers for two months of free service and reduced rates, discounted gym membership renewals, and generous gift cards from high-end department stores all underscore a pervasive fear on Main Street: With the uncertainty around the credit seize-up, consumers may be digging in for a long hibernation.
http://www.businessweek.com/investor/content/oct2008/pi2008103_779103.htm?campaign_id=twxa

Why Do Failed CEOs Keep Getting Rehired?
Poor stock performance? Weak sales? No matter! If you were once a C.E.O., you can surely be one again. Failed CEOs like Home Depot's Bob Nardelli who ended up at Chrysler and American Airlines' Don Carty who is leading Virgin Atlantic failed CEOs regularly end up at the helm of other companies. Here's why.
http://www.portfolio.com/executives/features/2008/10/05/Why-Failed-CEOs-Get-Rehired

Analyst upgrades:

• UBS believes US airlines estimates are too low and will move higher. The firm upgraded AirTran (NYSE: AAI), AMR Corp (NYSE: AMR), Continental (NYSE: CAL), Delta (NYSE: DAL) and Northwest (NYSE: NWA) to Buy from Neutral and JetBlue (NASDAQ: JBLU) to Neutral from Sell.
  
• JMP Securities upgraded DealerTrack (NASDAQ: TRAK) to OUtperform from Market Perform as they believe 2H08 guidance represents a floor and that 2009 estimates are achievable, among other reasons.
• Potash (NYSE: POT) and Mosaic (NYSE: MOS) were raised to Buy from Hold at Soleil.
  
• Argus upgraded Seagate (NYSE: STX) to Buy from Hold on Friday.

Analyst downgrades:

• Jefferies downgraded Citrix Systems (NASDAQ: CTXS) to Underperform from Hold as they do not see a catalyst for the company to grow into 2009 consensus estimates. The firm lowered their target price to $25 from $32.
  
• Citigroup said following Lehman's (NYSE: LEH) bankruptcy, they expect a distressed-sale of American International's (NYSE: AIG) MBS portfolio, resulting in the worst quarter yet for the company. Shares were cut to Hold from Buy.
• D.R. Horton (NYSE: DHI) was downgraded to Sell from Hold and Pulte Homes (NYSE: PHM) was downgraded to Hold from Sell at Citigroup.
  
• Merrill downgraded Goldman Sachs (NYSE: GS) to Neutral from Buy and JP Morgan (NYSE: JPM) to Underperform from Neutral.