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American, Air Canada, Delta and Continental up again; TAM falls on cut to ‘Hold’

30-Jul-2009

American Airlines (+8.1%), Delta Air Lines (5.1%) and Continental (+4.2%) stocks rose strongly again yesterday (29-Jul-09), as the positive halo from Morgan Stanley’s positive analysis of the carriers the day before continued to affect the industry.

Air Canada-B (+7.3%) shares also rose, following an announcement by the carrier that it had secured CAD1 billion in funding.

Meanwhile, Latin American carriers, led by TAM (-5.1%), tumbled, after Deutsche Bank forecast a 10-15% “correction” in Latin America equities during the northern Summer.

North & South America selected airlines daily share price movements (% change): 29-Jul-09

Air Canada secures CAD1 billion in financing

Air Canada (+7.3%) announced it has entered into arrangements to raise a total of CAD1 billion (USD) in additional liquidity through a series of financings and other transactions with GE Canada Finance Holding Company, Export Development Canada, Aeroplan Canada, and ACE Aviation Holdings. The financing surpasses a requirement of USD551 million of funding needed for the airline’s labour and pension agreements with its unions. The carrier stated that with these financings and other transactions, the pension funding moratorium and new pension deficit funding arrangements, as well as the 21-month extensions to its collective agreements on a cost neutral basis, it has strengthened its position amid the global financial downturn.

TAM’s shares downgraded to “hold”

Meanwhile, TAM (-5.1%) led the fall of Latin American carriers. The carrier has been on a consistent downfall since Citigroup Inc. cut its shares from “buy” to “hold”, following the Brazilian Government’s announcement of plans to ease new carrier requirements, raise foreign ownership limits and restructure landing slots at Rio de Janeiro Santos Dumont Airport. Citigroup also cited Brazilian LCCs Webjet, Azul and Trip’s “aggressive fleet plans” as increasing competition for TAM and resultantly decreasing yields.

Republic reports 66.5% fall in net profit for 1H2009

Republic Airways (+2.4%) reported a net profit of USD16.3 million for 1H2009, down 66.5% year-on-year, and net profit of USD14.1 million for 2Q2009, down 50.3% year-on-year. Passenger traffic for half remained flat, up only 0.4%, to 9.6 million passengers.


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