United Continental is sending Wall Street a clear message with its latest earnings report: Stop fretting, our domestic growth plan is working. Investors responded by pushing up the airline by the most in three months. Booming travel demand is enabling United to raise fares even as it beefs up flights at major hubs. That’s validating its aggressive expansion plan while allaying worries that the growth push would erode ticket prices. United also is making progress in enhancing premium offerings and wooing budget travelers with cheaper “basic economy” fares that offer fewer amenities. The airline’s string of positive results “appears supportive of the elevated growth strategy in contrast to our fears,” Raymond James Financial analyst Savanthi Syth wrote Wednesday in a note to clients. United climbed 6% to $88.54 at 2:18 p.m. in New York after surging as much as 7.1% for the most intraday since July 18. The advance, the biggest on the S&P 500 Index, led a rally of airline stocks. United’s 24% gain this year through Tuesday was the best performance on a Standard & Poor’s index of nine US carriers. “We’re struggling to find things to complain about, despite our most cantankerous efforts,” said Jamie Baker, an analyst at JPMorgan Chase & Co., echoing a similar tone to what he said after the Q2 report in July.<br/>
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United will continue its ban on carry-on bags for travellers buying its cheaper basic economy tickets, despite a recent policy change by rival American Airlines. "We're happy with where we're at," Andrew Nocella, United's executive VP and CCO, said on the airline's earnings conference call Wednesday. Nocella said basic economy, which United, American and Delta unveiled in the past few years to better compete with discounters including Spirit and Frontier, is working as designed and that there are no plans to change the bag policy. Delta has allowed a standard carry-on bag with basic economy tickets from the start. American and United introduced their basic economy tickets with a carry-on bag ban. Travellers were allowed to bring only a personal item, such as a purse, backpack or laptop bag, that fit under the seat. All other bags had to be checked for a fee. Those who waited until they got to the gate were hit with standard bag fees plus a surcharge of $25. American reversed its policy in September. United says the policy is designed to make sure travellers are following its basic economy baggage rules and to prevent them from having to pay a surcharge at the gate. <br/>
Lufthansa is exploring options including a sale for LSG Sky Chefs, the catering arm that serves planes, trains and the International Space Station, according to people with knowledge of the matter. The German airline is working with advisers to review the business, according to the people, who asked not to be identified because the information is private. Other possibilities include a combination with a competitor or selling a stake to a partner, they said. Airline catering is growing more slowly than overall air traffic, as short-haul flying outpaces longer routes and budget carriers gain market share. With travellers increasingly unwilling to pay for food on shorter hops and airlines pressuring suppliers on costs, caterers have been branching out into supplying trains and supermarkets to make up for lost business. Deliberations are at an early stage, and Lufthansa isn’t running a formal sale process, according to the people. It could still opt to retain its ownership of LSG Sky Chefs, the people said. A representative for Lufthansa declined to comment. Sky Chefs was founded by American Airlines in the 1940s and merged with Lufthansa’s own LSG division in a series of transactions through 2001. The combined business grew to become the world’s largest airline caterer, before later being overtaken by Swiss rival Gategroup.<br/>