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ExpressJet to be acquired by SkyWest; Republic Airways profit down on acquisitions

5-Aug-2010

A slight majority of North and South American airline shares moved higher on Wednesday (04-Aug-2010) after SkyWest announced plans to acquire ExpressJet and wider markets advanced. Airline stocks were also boosted by a 0.1% decline in oil prices to USD82.47.

The Dow (+0.4%) gained after improved services and private sector employment figures outweighed disappointing poor retail revenue results.

ExpressJet to be acquired by SkyWest

ExpressJet (+100.3%) soared after SkyWest entered a definitive merger agreement with ExpressJet Holdings, whereby Atlantic Southeast Airlines, SkyWest's wholly owned subsidiary, will acquire all of the outstanding shares of common stock of ExpressJet for USD6.75/share in cash, representing a net purchase price of approximately USD133 million after giving effect for shares already owned by Atlantic Southeast.

See related report: SkyWest to acquire ExpressJet in continued US regional consolidation

Upon completion of the merger, ExpressJet will become a wholly owned subsidiary of Atlantic Southeast, with the intention of combining the operations of ExpressJet Airlines and Atlantic Southeast, subject to receipt of necessary regulatory approvals, and utilising Atlantic Southeast's existing facilities in Atlanta, Georgia as the operating headquarters of the combined company.

See related CAPA Profile: Mergers and Consolidation

Republic Airways profit down on acquisitions

Republic Airways (+7.0%) was also up after the group reported a net profit of USD2.6 million for the three months ended 30-Jun-2010. However, this was a decline of 81.5% year-on-year, which it partly attributed to the purchase of Frontier Airways and Midwest Airlines. More positively, revenue climbed 111.6% for the quarter, to USD683.3 million.

See related report: Pinnacle maintains profitability, but net earnings ease in 2Q2010

US Airways traffic down for Jul-2010

US Airways (-5.9%) fell on a 0.8 ppt year-on-year decline in load factor to 85.1%, for Jul-2010. The fall was the result of a 1.0% increase in traffic (RPMs) on a 1.9% increase in capacity (ASMs). Passenger numbers were also down for the month, falling 1.0% to 5.4 million.

However, President, Scott Kirby, stated consolidated passenger revenue per available seat mile (PRASM) increased approximately 16% year-on-year, while total revenue per ASM increased approximately 17%. He attributed the improvement to a continued year-on-year strength in business demand and yield.

See related CAPA Profile: Traffic and Capacity

Elsewhere, Allegiant (-2.8%) and United Airlines (-2.5%) also ended the session lower, while WestJet (+4.3%) and Air Canada (+4.1%) rose.

North & South America selected airlines daily share price movements (% change): 04-Aug-2010


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