Wall Street Says 'Jump.' Airlines, Led by Alaska Air, Ask 'How High?'

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P/>SEATTLE ( TheStreet) -- Airlines, desperate to show investors that their business is viable, are being led by Alaska Airlines toward investment respectability.

Last week, the carrier pulled out a copy of the Wall Street playbook and followed every rule. It raised bag fees and change fees. It signed a five-year pilot contract. It squeezed more money out of its credit card agreement with Bank of America . And it declared a dividend of 20 cents a share. This is all on top of the $250 million stock buyback program Alaska announced last summer.

"We wanted to be a good place to invest, not a good place to trade but a good place to invest," said CEO Brad Tilton during a jovial conference call on Friday, in which executives and analysts alike applauded the carrier's recent actions.

"We've been waiting for this," Hunter Keay, a senior analyst with Wolfe Research in New York, wrote Friday in a report on the new bag fees, in which he said: "Fee news alone is reason enough to get excited about the stock." During the investor call, Keay praised the carrier's series of investor-oriented actions. "Thanks for exhausting all of my questions for about two years," he said.

Cowen analyst Helane Becker wrote, "We have long hoped Alaska Air would add a dividend to its capital deployment plan, and it did today."

Airline analysts, it seems, are tired of being looked down on by analysts who follow more consistently reliable sectors.

"The fact that airlines are now competing on the basis of capital deployment strategies comes as an absolute shock to this particular grey-haired analyst and affords further evidence, in our view, that the industry has turned an important corner," wrote JPMorgan analyst Jamie Baker in a report issued Friday.

In recent years, Alaska shareholders have been well-rewarded for the airline's investor orientation. In 2010, shares rose 62%, prompting this story , headlined: "Why Wall Street Loves Alaska Airlines."

In the fourth quarter of 2010, Alaska produced a return on invested capital of 10.7% and CRT Capital Group analyst Mike Derchin wrote a report: "Believe It Or Not, An Airline That Earned Its Cost of Capital; Bravo!."

In 2011, Alaska shares gained 30%, leading all airlines. In 2012, the gain was a respectable 24%.

This year, Alaska shares are up 42%, trailing only Spirit , up about 90% and Delta , up about 64%. Shares of Southwest ,US Airways and United all have percentage gains in the 30s. The S&P 500 is up 18%.

Baker said Alaska has joined the parade of carriers responding to Wall Street concerns this year. "Delta announced its long-awaited capital deployment strategy in early May," Baker wrote. "Days later, Southwest, feeling the competitive heat, quadrupled the size of its dividend. Now it is Alaska's turn.