British Airways Climbs Steeply as Goldman Sachs Says Get Aboard

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Byline: Mickey Clark markeT rOUnD-Up

STAND by for take-off at British Airways was the advice Goldman Sachs gave to its clients today as it added the shares to its influential Conviction Buy list.

BA shares responded with a jump of 13.9p to 241.3p, making them one of the best performers among the top 100 companies. They have come up from a low of 188p since July and, according to the American broking house, there is scope for a further 45% improvement in the price if the revenue recovery starts on a restructured cost basis.

Goldman has raised its six-month price target from 165p to 315p. It says the revenue recovery is under way and will be achieved by further cost savings and effective hedging against fuel price rises. Margins will also improve more rapidly than at other national carriers largely due to BA's exposure to the lucrative North Atlantic routes, the broker adds.

The broking house prefers BA to Air France-KLM, which it has dropped from its Conviction Buy list.

BA is currently in merger talks with Spain's flag-carrier Iberia, and has been speaking to American Airlines about a possible alliance.

Investors generally continued to thank their lucky stars for quantitative easing, producing a steady flow of money which has been finding its way back into the stock market, as fund managers -- who have sold corporate bonds to the Bank of England -- use the money raised to look for better returns elsewhere.

The FTSE 100 index sported a rise of 45.39 at 5169.52.

Wall Street made a slow start this afternoon, but later perked up on news that housing starts had risen to their highest since November, while the number of new jobless claims fell unexpectedly by 12,000 last week. The Dow Jones rose 41.79 to 9833.50.

Speculative buying pushed Tullow Oil up 41p to 1228p. The price has come up from 1026p since the start of the month. Tullow yesterday announced an oil find off Sierra Leone. Today it followed that good news with another discovery, this time in Uganda. Together, the finds would make Tullow much more attractive to any would-be bidder. Earlier this week, Italy's ENI was being tipped to offer up to 2000p a share for Tullow. …