US Airways led a rally Tuesday in airline stocks amid expectations that an increase in average fares will carry over from summer into early fall.

J.P. Morgan upgraded US Airways Group Inc. and Delta Air Lines Inc. and slightly raised its 2013 profit forecasts for United Continental Holdings Inc., JetBlue Airways Corp. and Southwest Airlines Co. Analyst Jamie Baker said that the airlines would benefit from firm revenue trends and retreating oil prices.

Most of the major U.S. airlines reported that a key measure of revenue for every seat flown one mile rose around 4 percent to 5 percent in August compared with a year earlier. That number rises when airlines can sell the average ticket for a higher price, so the August numbers indicated that travel demand was solid despite the sluggish economy.

Baker said the August figures surpassed his expectations, and he was optimistic about September. That and retreating oil prices should result in higher-than-expected third-quarter earnings for airlines, he said in a note to clients Monday night.

Baker also handicapped the chances of the American Airlines-US Airways merger going through at 50-50. The U.S. Department of Justice and seven states are suing to block the merger, with the trial scheduled to begin Nov. 25.

US Airways shares closed up 65 cents, or 3.6 percent, to $18.72; Delta shares gained 17 cents to $23.32; United shares rose 29 cents to $32.95; Southwest rose 12 cents to 14.22; JetBlue stock gained 7 cents to $6.60; and Spirit Airlines Inc. shares added 42 cents to $34.18. Shares of American parent AMR Corp., which are traded over the counter, lost 4 cents to $3.77.

Copyright (2013) Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Photo Credit: A Delta Air Lines jet lands at BWI Thurgood Marshall International Airport near Baltimore, Maryland. Gary Cameron / Reuters