22-Mar-2010 4:42 PM

American Airlines to be fined over USD1 million by FAA; Continental outlines 2010 fleet plan

Analysis

North and South American carriers' shares declined with falls in the wider market on Friday (19-Mar-2010), despite a large drop in oil prices (-1.9%), to USD80.68. The Dow (-0.4%) was down after investors decided to take a break after pushing the index to an 18-week high the day prior. The AMEX Airline Index ended trading down 3.1% as a result.

American Airlines to be fined over USD1 million by FAA

American Airlines (-5.6%) took the biggest dive of the day. The US Federal Aviation Administration (FAA) proposed over USD1 million in fines against the carrier, for alleged safety violations. The proposed fines cover four separate instances where the FAA alleges that American was negligent in either maintaining aircraft or following proper maintenance procedures.

The fines come only weeks after the FAA commented that it was considering a record high USD20 million in penalties against American. American Airlines stated it is reviewing the fines and will meet with the FAA to discuss the situation.

Continental Airlines outlines 2010 fleet plan

Continental Airlines (-3.9%) was also down. The day prior, the carrier released an outline of its 2010 fleet plan, including details of aircraft operated on its behalf through a Capacity Purchase Agreement. Details include:

Mainline fleet:
- The carrier had a mainline fleet of 337 aircraft at the end of 2009.
- Continental plans to induct 19 aircraft (three B757-300s, nine B737-800s, two B737-900ERs and two B777-200ERs) and retired six aircraft (three B737-500s and three B737-300s), increasing its mainline fleet to 350 aircraft.
Regional Fleet:
- The carrier had a regional fleet of 227 aircraft at the end of 2009;
- Continental plans to induct six new regional aircraft (six Q400s) and retire 13 (six ERJ-145s and seven CRJ-200LRs), reducing its regional fleet to 257 aircraft.

Gol lower

LCC, Gol (-3.5%) also fell, despite announcing the conclusion of the expansion work on its Aircraft Maintenance Centre. See related article: AirTran, Southwest and JetBlue ease, Gol lower

Copa prices Class A non-voting shares

Copa (+0.1%) was meanwhile one of few carriers to end trading up, after parent, Copa Holdings, priced 1.6 million of its Class A non-voting shares the day prior by selling shareholder Corporacion de Inversiones Aereas (CIASA). The secondary offering of Class A common stock priced at USD56.00 per share and is expected to close on 24-Mar-2010. Copa Holdings will not receive any proceeds from the offering. The underwriter has an over-allotment option to purchase up to an additional 240,000 shares from CIASA. Morgan Stanley & Co Incorporated is acting as sole book-running manager and underwriter for the offering.

ExpressJet (+4.1%) and Allegiant (+0.2%) were also up at the end of trading.

Also in today's America Airline Daily:

American Airlines to increase its Richmond-Chicago O'Hare service;
Delta Air Lines to shift its entire fleet of MD-90s to Minneapolis/St. Paul International Airport;
FAA to expand its headquarters;
LAN Ecuador to begin operations to the Galapagos Islands.

North & South America selected airlines daily share price movements (% change): 19-Mar-2010

American Airlines to be fined over USD1 million by FAA; Continental outlines 2010 fleet plan