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American Airlines expects increase in traffic next year; US Airways and Delta Air Lines decline


American Airlines (+3.7%) was the biggest gainer on Thursday (16-Dec-2010) after announcing it expects fuel costs to be higher this year, but also expects a rise in passenger traffic. The carrier expects to spend USD6.4 billion of fuel this year, compared with USD5.6 billion in 2009. Passenger traffic (RPMs) are expected to rise 3% year-on-year for American Airlines and 7% for American Eagle.

Responding to the forecast, analysts stated they now expect the carrier to report better-than-expected revenue for 4Q2010. UBS’ Kevin Crissey reduced his forecast loss for AMR for 4Q2010 from USD0.43 to USD0.30 per share. JP Morgan’s Jamie Baker also lowered his loss forecast from USD0.27 to USD0.24. According to Thomson Reuters, analysts on average now expect AMR to report a loss of USD0.39 per share for the quarter, but return to profitability in 2011.

FedEx raises 2011 outlook again

FedEx (+2.0%) also rose after raising its earnings guidance for the third successive quarter. For 2011, the freight carrier now expects earnings per diluted share of USD5.00 to USD5.30. It also expects earnings per diluted share of USD0.95 to USD1.15 for 3Q2010 (three months ended 28-Feb-2010).

See related CAPA Profile: Outlook, Forecasts, Guidance

Also during trading, FedEx reported an 18% year-on-year decline in net profit to USD283 million for 2Q2010 (three months ended 30-Nov-2010). Operating profit was also down 18% for the quarter to USD469 million. The decline was on a 12% rise in revenue to USD9632 million, while operating costs were up 14% to USD9163 million.

United Continental Holdings (+2.1%), Copa Airlines (+2.1%) and UPS (+2.1%) were also higher for the session.

US Airways slips

US Airways (-0.1%) slipped for the day after Citigroup initiated coverage of the carrier with a "hold" rating and a price target of USD12.50. Earlier in the week, Barclays Capital raised its price target for the carrier from USD14 to USD15, with a "equal weight" rating. US Airways ended Thursday at USD10.3.

Delta to expand first-class capacity

Delta Air Lines (-0.6%) continued to decline, despite announcing plans to expand its first-class cabin on more than 60% of its mainline domestic fleet – approximately 350 aircraft – as the carrier responds to business customers’ requests for more premium cabin seating. By summer 2013, Delta will add more than 1200 first-class seats to its domestic MD-88, MD-90, Boeing 757-200 and Boeing 767-300 aircraft as it retrofits and upgrades the aircraft interiors. The initiative, which follows the addition of first-class cabins to all Delta Connection regional jets with more than 60 seats, does not impact Delta’s previously announced capacity guidance.

See related CAPA Profile: Premium Traffic

Elsewhere, Brazilian carriers GOL (-2.2%) and TAM (-0.2%) were also down, as the Bovespa (-0.8%) slipped.

North & South America selected airlines daily share price movements (% change): 16-Dec-2010

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