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Allegiant and AirTran up 4%, other North and South American LCCs gain 2%

13-May-2010

North and South American low cost carrier stocks gained yesterday boosted by gains in the wider market. The Dow (+1.4%) rose on a boost in the technology sector, particular gains from IBM. The AMEX Airline Index ended trading up 3.6%.

Also pushing stocks higher, the Air Transport Association of America (ATA) forecast that approximately 2.2 million passengers per day will travel globally on US airlines between 01-Jun-2010 and 31-Aug-2010. This estimate of approximately 202 million passengers is an improvement of roughly 1% year-on-year.

The association also estimated fuel costs for the period would rise 20% to USD2.19 per gallon. Oil prices declined 1.0% to USD75.58 on Wednesday, sending stocks higher.

AirTran led the way up (+4.4%), while Allegiant closed 4.1% higher. The other North and South American LCCs gained more than 2.0% yesterday – JetBlue advanced (+3.3%), WestJet gained (2.9%), while Southwest and GOL added 2.2% each.

Spirit Airlines pilots can call lawful strike after 30-days cooling-off

In other LCC news from the Americas, Spirit Airlines pilots, represented by the Air Line Pilots Association (ALPA), announced (12-May-2010) they had received confirmation of the 30-day cooling-off period from the National Mediation Board (NMB) an had up until 12-Jun-2010 to reach an agreement on a new pilot contract. After that time, pilots may call a lawful strike. Spirit pilots have been in negotiations with management for more than three years. In Feb-2010, the pilots applied to the NMB for a proffer of arbitration. On 03-May-2010, the NMB proffered binding arbitration to both sides, which the pilots refused two days later. This refusal allowed the NMB to call for a 30-day cooling-off period.

On its network, Spirit Airlines confirmed reports it will discontinue its Fort Lauderdale-Freeport service on 30-May-2010 due to a lack of customer demand for the route.

Meanwhile, the carrier would “love” to launch services to Havana in Cuba, according to CEO and President, Ben Baldanza in Travel Weekly (10-May-2010), but “who knows when”. It has been unable to generate a profit in that market under the “current convoluted charter system they've set up”.

Mr Baldanza stated the main concern of the carrier is keeping overall cost to the passenger down, even as the carrier adds fees for optional services. Mr Baldanza added the carrier has lowered fares as it has added fees to keep the overall cost to the passenger down.

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Selected LCCs daily share price movements (% change): 12-May-2010


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