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China Eastern's pax surge one year after Olympics, China Southern expects improved 2H2009 earnings


China Eastern Airlines shares gained 2.9% yesterday, as the carrier reported a 51% jump in Aug-2009 passenger numbers, with growth across the board (although predominantly driven by a 59% jump in domestic pax). It follows last year’s weak base, due to reduced travel associated with the Beijing Olympics.

The carrier experienced passenger load factor improvements of 8.4 ppts to 77.8%, with growth across domestic, regional and international operations.

Cargo volume also grew in the month, up 8.1%, thanks to double-digit domestic growth. Hong Kong/Macau cargo volumes were however down by double-digit levels, with international cargo volume also weaker year-on-year.

Asia Pacific selected airlines daily share price movements (% change): 10-Sep-09

China Southern expects improved 2H2009 earnings, but still seeing lingering weakness

China Southern Airlines’ shares were up 4.4% yesterday, after Chairman, Si Xianmin, stated the carrier expects stronger earnings in 2H2009 compared to 1H2009 levels, due to a recovery in passenger and cargo demand.

The carrier also stated it is seeing signs of recovery, although lingering weakness has forced the carrier to delay some aircraft orders and seek additional government aid. The carrier, however, still expects to add 35 aircraft to its fleet in 2009, and expects passenger volume in the full year to reach 2007 levels, due to a recovery in the domestic market.

Cathay Pacific concerned that current improvements just a seasonal variation

However, Cathay Pacific CEO, Tony Tyler, expressed concerned that the carrier’s current improvement in yield and cargo volumes could just be the “usual seasonal variation” rather than signs of underlying improvement. Mr Tyler added that the carrier’s recovery from the current economic downturn would be prolonged, stating it will "take us a long time to get out of this trough". Cathay Pacific shares gained 1.0% yesterday.

Korean Air and ANA seeing international growth

Also in North Asia, Korean Air stated international passenger traffic rose 9% year-on-year in Aug-2009, with the average number of reserved seats on international routes in Sep-2009 up 21% (driven by a 59% growth in Japan, and double digit growth in the Americas and Europe), on capacity growth of 9%. The carrier stated it has seen increased demand, both outbound and inbound, and among business and leisure passengers, since Jul-2009. 

All Nippon Airways Group (ANA) is forecasting a 10% improvement in international passenger numbers in Sep-2009, following a 3.5% increase in international levels in Aug-2009. Domestic passenger numbers, however, are expected to be down 2.0% in Sep-2009, following a domestic contraction of 9.7% in Aug-2009.  The carrier’s share price was up 1.1% yesterday.

Jet Airways shares affected by continued flight disruptions, could affect fund raising

In India, Jet Airways' shares slipped 3.5% on the third day of flight interruptions by the carrier’s pilots, resulting in the cancellation of 234 services (197 domestic and 37 international). The carrier has also cancelled at least 141 domestic services today, for a total of 484 services this week. The strike is also negatively affecting bookings, with domestic bookings dropping 39% to 14,000 per day and international bookings down 9.5% to 9,500 per day.

A further concern is that the current disruption may affect the carrier’s plans to conduct its largest fund-raising plan since its IPO. The carrier’s share price is currently approximately 77% lower than its IPO sale price.

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