16-Sep-2010 4:17 PM

Hawaiian Airlines expecting 5.5-7.5% jump in PRASM; United Airlines also expecting improved revenue

Analysis

North and South American airline stocks soared again on Wednesday (15-Sep-2010), as US carriers continued to release improved guidance for 3Q2010 during the session. A gain in the Dow (+0.4%) also sent airline shares higher, despite data showing industrial output grew at a slower rate in Aug-2010.

Hawaiian Airlines expecting 5.5-7.5% jump in PRASM

Hawaiian Airlines (+7.9%) soared after holding company, Hawaiian Holdings, released revised guidance for 3Q2010. The carrier expects passenger revenue per ASM (PRASM) to rise 5.5-7.5% year-on-year for the quarter, to approximately USD 10.74 cents. This is up from its previous forecast of a 4.5-7.5% gain.

The carrier also expects cost per ASM to be flat to up 2.0% for the period, as ASMs are expected to increase by 8.0-9.0%.

See related CAPA Profile: Outlook, Forecasts, Guidance

United Airlines also expecting improved PRASM

United Airlines (-0.3%) slipped, despite parent, UAL Corp, stating it expects a 18.0-19.0% year-on-year improvement in PRASM for 3Q2010, to USD 13.10 cents to USD 13.21 cents. Cost per ASM is expected to rise 5.7-6.0% for the period, to USD 12.30 cents to USD 12.34 cents.

The company also expects to end the Sep-2010 quarter with an unrestricted cash balance of USD4,900 million, which includes scheduled debt and capital lease payments of USD220 million and debt repayments of USD145 million, and a restricted cash balance of USD240 million.

Traffic wise passenger traffic is expected to increase 3.2-4.2% on a 2.5% rise in capacity.

See related CAPA Profile: Yields

Continental and United shareholders to vote Friday

Continental Airlines (-0.1%) and United Airlines (-0.3%) also slipped ahead of its shareholder vote on Friday 17-Sep-2010 on the USD3.2 billion merger between the airlines. Stockholder meetings will be held in Continental's Houston headquarters and United's Chicago headquarters, with votes to be release shortly after the meetings on Friday. Meetings have been held in Denver between the airlines' managements and Air Line Pilots Association. Union representatives from both airlines have previously stated that they consider the merger to be in the best interests of the two airlines.

Elsewhere, Delta Air Lines (+2.9%) continued to rise after stating it expects a 15% improvement in PRASM for 3Q2010 the day prior. Jazz Air Income Fund (-2.3%) and Allegiant (-2.2%) were down.

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

Hawaiian Airlines expecting 5.5-7.5% jump in PRASM; United Airlines also expecting improved revenue