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Asia Pacific recovery appears solid as EVA reports good growth. JAL announces route reductions

29-Apr-2010

Despite the more hospitable market environment that Asia Pacific airlines now seem to be enjoying, most airline share prices were down with the overall market, as debt worries in Europe disrupted positive sentiment.

Indian and Chinese airlines led the way down, accompanied by Qantas (-2.4%), as Virgin Blue (+0.9%) threatened to improve its competitive position with talk of cooperation with Air New Zealand (steady). Jet Airways lost 4.0%, Kingfisher lost 3.2% and SpiceJet was off 1.9%; Air China continued its downward slide (-2.5%), while China Eastern also lost 2.1%.

Apart from Virgin Blue, China Southern (+0.5%) and Korean Air (+0.7%) were the only other carriers which managed to swim against the tide.

EVA reports strongest March quarter results in 5 years; to issue 500 million new shares

EVA Air, despite reporting a strong result, was steady, although this followed consecutive gains of a total of nearly 7% on the two previous trading days. The carrier reported its highest quarterly profit for over five years, with net income rising to NTD1.25 billion for the three months to 31-Mar-2010. This was up from from NTD200 million in the same quarter last year.

Passenger numbers were up 17%, up to 1.64 million. Also, reflecting a strengthened freight market, EVA announced that it had increased freight rates by 20-30% last week.

EVA also announced it will issue another 500 million new shares, allowing it to pay down debt and strengthen its balance sheet. Shares closed yesterday at NTD15.40.

China Airlines, Taiwan’s largest airline, had previously also reported a record first quarter profit.

Part of the impetus for the improved traffic figures is from expanded non-stop services to the Chinese mainland, but a broad economic recovery is pushing this trend.

JAL to drop another 15 international routes, 30 domestic routes

JAL (whose shares were suspended in the wake of its bankruptcy filing) yesterday announced its next round of capacity cutbacks. The airline will discontinue services on a further 15 international routes with 86 weekly roundtrip flights, as well as on 30 domestic routes with a maximum of 58* daily roundtrip flights.

Totaling the changes made since fiscal year 2009, JAL will end operations on 28 international routes with the closure of 11 overseas bases while domestically, 50 routes will be terminated along with 8 offices. The international and domestic passenger capacity (ASKs) will as a result be reduced by 40% and 30% respectively compared to levels in fiscal year 2008.

IATA reports solid Mar-2010 growth

In a further sign of improving market conditions, IATA reported that Asia Pacific airlines performed better in Mar-2010 than most other regions. Revenue passenger kilometres were up by 12.6%, well ahead of capacity growth, which increased by only 1.3%.

As a result, Asia Pacific carriers continue to have the highest average international load factors (second only to US’ mainly domestic levels), at 79.1%. This was up nearly 8ppt from last year’s March figure of 71.2%.

Meanwhile, freight tonne kilometres (FTKs) were up by a very healthy 34.1%, against 12.5% growth in AFTKs.

IATA airlines RPK growth by region: Mar-09 to Mar-2010

IATA airlines ASK growth by region: Mar-09 to Mar-2010

Asia Pacific selected airlines daily share price movements (% change): 28-Apr-2010


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