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Delta RASM up 23% for Jun-2010; US Airways 'cautiously optimistic' for 2010

16-Jun-2010

North and South American carriers’ stocks rose for another day on Tuesday (15-Jun-2010), boosted by positive outlooks from US airline executives during the day and gains in wider markets. The Dow (+2.1%) rose on a rising energy sector and improved hopes for global economic recovery.

Delta Air Lines RASM up 23% for Jun-2010

Delta Air Lines (+2.2%) reported Jun-2010 revenue per available seat mile (RASM) increased 23% year on year, with 2Q2010 RASM up 20% year-on-year. Revenue increased 63% year-on-year in May-2010, while ticket volumes were up 35%. Corporate bookings also increased 35%.

The carrier has projected a 2Q2010 EBITDAR of EUR1.4 billion and an operating margin of 10-11% for the quarter. Domestic capacity is projected to be flat, while international capacity is expected to be reduced 1%. Unit costs excluding fuel are projected to increase 1%.

See related report: Delta Air Lines targeting 10% return on invested capital

Also during trading, Jesup & Lamont analyst, Helane Becker, reiterated the company’s "buy" rating of Delta’s common shares, with a price target of USD20, or 10 times estimated 2010 earnings per share (EPS) of USD1.99, which is an increase from its prior estimate of USD1.93. Ms Becker also increased the company’s 2Q2010 EPS estimate from USD0.57 to USD0.62 and are using a 10.6% operating margin. Zacks meanwhile upgraded its rating of Delta’s shares from "neutral" to "outperform", based on improved economic conditions and revenue trends.

US Airways 'cautiously optimistic' for 2010

US Airways (+8.3%) was boosted by comments from President, Scott Kirby, who stated the carrier’s outlook for 2010 is “characterised by cautious optimism”. He added that the industry “appears to be turning a corner”, with the carrier seeing a “dramatic” recovery in business demand.

See related report: US Airways President Scott Kirby cautiously optimistic: It’s different this time 

Continental expects USD1bn in synergies from United merger

Continental Airlines (+4.0%), meanwhile, stated it expects USD1.0-1.2 billion p/a in synergies from its proposed merger with United Airlines (+3.6%), including revenue synergies of USD0.8-0.9 billion and net cost synergies of USD0.2-0.3 billion. 75% of synergies are expected to be achieved in the second year, with full run-rate expected in year three. The carrier also expects the combined network will add more than 2 million passengers p/a.

See related CAPA Profile: Mergers and Consolidation

Elsewhere, Allegiant (-2.5%) and JetBlue (-0.5%) were the only carriers to fall for the day.

North & South America selected airlines daily share price movements (% change): 15-Jun-2010


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