UBS says airlines have been guiding rev growth down from prior expectations as passengers reconsider travel given the increased hassles of the new security rules. Firm expects all carriers will be similarly impacted and have lowered their RASM and EPS ests across the board. Firm notes that airline stocks do best when fuel prices fall and October is the month when this happens the most. Firm says positive returns each of the last 10 years have occurred in October. Firm says the October pattern may or may not occur this year but regardless they reiterate their Buy recommendations on CAL, AMR, LCC, UAUA, AAI and LUV. Firm remains bullish on U.S. airline fundamentals, particularly on the supply side, and expect modest RASM growth in 2007 to lead to higher earnings and stock prices.

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