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American Airlines planning to lay off pilots; Continental price target lowered


North and South American carriers stocks fell with the wider market on Friday (22-Jan-2010), which suffered its worst week since Feb-2009. Stocks fell on President Obama’s proposal for stronger limits on banking risks, in a week when stocks were already weak due to poor sentiment from 4Q2009 financial results and news Chinese regulators have ordered some of the country’s banks to temporarily stop lending.

As a result, both the Dow (-2.1%) and AMEX Airline Index (-2.0%) were down. Oil prices (-2.0%) also dropped, to USD74.54.

American Airlines planning to lay off pilots

American Airlines reportedly plans to lay off up to 175 pilots, 2% of its 7,800 pilots, in the first half of 2010 due to lower capacity plans, with 80 pilots to be furloughed at the end of Feb-2010. The carrier declined to disclose how much it would save from the furloughs.

In other American Airlines news, the carrier, along with Delta Air Lines (-1.1%) and United Airlines (+0.6%) increased domestic city pair fares by USD15, USD10 and USD6, respectively, a sign the carriers are soon to implement their first broad-based fare rise for 2010. The fare hike weakened the effect of the wider market sell-off on Delta and United, with United the only carrier besides LAN Airlines (+0.1%) to end trading in the black.

According to SmarTrend, LAN is currently above its 50-day moving average of USD16.10 and 200-day moving average of USD12.91. The carrier ended trading on Friday at USD19.80.

Continental price target lowered

Continental Airlines meanwhile had its price target lowered by Barclays Capital to USD24.00 from USD26.00, after lowering its EPS profit of USD1.85 for 2011. However, Barclays lowered its expected EPS loss for 2010 to USD1.85.

Other news available in today’s America Airline Daily includes:

  • Delta expands mileage redemption options with new 'SkyMiles Marketplace';
  • Groupe Aeroplan Inc. announces exercise of underwriters' over-allotment option;
  • Obama nominates new safety board member;
  • Southwest Airlines resumes services at Albuquerque International Sunport.

GOL and TAM slump

GOL (-6.6%) and TAM (-4.4%) meanwhile suffered the greatest losses on Friday. Fellow Brazilian carrier, Azul Linhas Aereas SA confirmed during trading that Texas Pacific Group (TPG) purchased a 10% stake in the LCC.

North & South America selected airlines daily share price movements (% change): 22-Jan-2010

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