U.S. airlines shares rallied on Tuesday, a day after United Airlines gave a positive revenue outlook for the second quarter.

UAL Corp., parent company of United Airlines, led industry stocks with a 7.1 percent rise in early-afternoon trading on Nasdaq, outpacing the Amex Airline index, which added 1.77 percent.

United, the No. 2 U.S. carrier, estimated in a U.S. Securities and Exchange Commission filing on Monday that mainline unit revenue will increase between 2.75 and 3.25 percent overall compared with the same period in 2006. The airline also narrowed its non-fuel cost estimate for the period.

The revenue guidance is the industry's first for the quarter, usually a busy period for airlines. The positive outlook is good news for the industry, which has been weighed down by soaring fuel costs, overcapacity and predictions for softening domestic demand.

United had decent guidance for the second quarter and you had some of the sell-side analysts talking a little more positively for the back half of the year, said Brian Nelson, equity analyst for Morning Star.

Nelson said airline shares also benefited from a research note from UBS raising its rating on US Airways Group and a slight dip in oil prices. Nymex crude futures fell 14 cents to $68.95 a barrel.

UAL also said on Tuesday it will hire and train up to 100 pilots by the end of 2007, in the first such move since 2001.

On the New York Stock Exchange, U.S. Airways Group Inc. trailed slightly behind United Airlines, with a 6.23 percent rise to $28.99. Continental Airlines advanced 3.25 percent to $33.97, while AMR Corp.'s American Airlines rose 3.25 percent to $26.39.

(Additional reporting by Kyle Peterson)

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