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Continental expecting USD390m in revenues for 3Q2010; JetBlue stocks rated neutral


North and South American airline stocks were a mixed bag on Wednesday (22-Sep-2010), despite a decline in wider markets. The Dow (-0.2%) slipped, after the Federal Reserve decided against new stimulus spending but stated they would be prepared to act if the economy continues to “cool”.

American Airlinesforecast leads to analyst cuts

Elsewhere, American Airlines (-8.7%) suffered the biggest fall of the day, after the release of its 3Q2010 the day prior resulted in a number of analysts reducing their estimates.

  • Dalman Rose & Co analyst, Helane Becker, state she now expects the carrier’s 3Q2010 earnings per share (EPS) to total USD0.26, compared to a consensus estimate of USD0.53;
  • J.P. Morgan also cut its guidance for the carrier from USD0.65 to USD0.31 per share;
  • Stifel Nicolaus analyst, Hunter Keay, stated American’s expectation of a 9.8-10.8% rise in unit revenue for the quarter is still below his earlier estimates;
  • Citigroup cut its price target for the carrier from USD9 to USD8.

Continental expects USD390m in revenues for 3Q2010

Continental Airlines (-3.5%) also declined, despite stating during trading that it expects cargo, mail and other revenue to reach USD390 million for the three months ending 30-Sep-2010. The carrier also expects to end the quarter with between USD4.1 billion and USD4.2 billion in unrestricted cash, cash equivalent and short-term investment.

In terms of traffic, Continental expects load factor to reach 85-86% for 3Q2010, on a 0.6% increase in capacity (ASM). Costs per ASM are expected to total USD 12.00-12.05 cents for the period, or USD 8.60-8.65 cents excluding fuel.

For FY2010, the carrier expects load factor to reach 83-84%, on a 0.8% increase in capacity. Costs per ASM are expected to total USD 12.17-12.22 cents, or USD 8.76-8.81 cents.

See related CAPA Profile: Outlook, Forecasts, Guidance

JetBlue stocks rated ‘neutral’

JetBlue (-2.8%) was down after Zacks initiated coverage of the LCC with a "neutral" rating. The analysts stated they believe the carrier will continue to benefit from its recently “launched Sabre system, improved pricing, higher traffic, additional ancillary revenue opportunities and future commercial partnerships”. However, the analysts believe the potential of the carrier’s stock may be limited by its “large exposure to New York metropolitan area, competitive threats and fuel price volatility”.

Hawaiian Airlines looks to expand

Hawaiian Airlines (+1.8%) rose after CEO, Mark Dunkerley, stated the carrier is seeking to expand its network with new destinations and aircraft, with a particular focus on Asia’s growing leisure-travel market. Mr Dunkerley added that "demand is coming back".

See related CAPA Profile: Route Changes

Elsewhere, Atlas Air (+4.3%) continued to rise of its revised outlook the day prior, with Air Canada (+3.3%) also continuing its latest rally. US Airways (-6.1%) and Delta Air Lines (-4.4%) were down. 

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

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