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LAN Airlines net profit rises on improved passenger and cargo revenues; TAM and Copa down


North and South American airline stocks ended their winning streak on Tuesday (27-Jul-2010), as markets slumped in afternoon trading. The Dow (+0.1%) still ended the session marginally higher, despite The Conference Board reporting a drop in US consumer confidence.

The AMEX Airline Index (-1.6%) fell as a result, with not even a 1.7% decline in oil prices, to USD77.50, softening the blow.

In Latin American markets, Chile’s IPSA (+0.3%) rose to a sixth consecutive all time high for the day. The rise was led by the retail and consumer sectors on expectations of a continuation in strong domestic demand. Brazil’s Bovespa (+0.4%) also gained, increasing for a seventh consecutive day, its longest winning streak this year. The market rose on expectations interest rate rises are to slow and bank lending is to increase.

LAN Airlines net profit rises on improved passenger and cargo revenues

LAN Airlines (-0.8%) slipped during the session, as it reported a 13.2% year-on-year increase in net profit for the three months ended 30-Jun-2010, to USD60.6 million, marked by a strong recovery in the cargo and passenger businesses. The result was similar to expectations from analysts surveyed by Bloomberg News, on average forecasting a quarterly profit of USD58.8 million.

Operating income reached USD112.6 million for the quarter, which represents a significant increase compared to USD34.9 million in the previous corresponding quarter. Operating margin reached 10.9%, an increase of 6.4 ppts. Operating income for 2Q2009 included a USD52.6 million realised fuel hedging loss, while the realised fuel hedging gain for 2Q2010 totaled USD1.3 million.

Total revenues for the quarter reached USD1,033.6 million, compared to USD785.1 million in the previous corresponding period, due to a 24.5% increase in passenger revenues and a 60.3% increase in cargo revenues. Passenger and cargo revenues accounted for 66% and 31% of total revenues.

See related CAPA Profile: Financial Results

LAN’s stock price had been steadily increasing over the past week before declining this week.

LAN Airlines stock price: 27-Apr-2010 to 27-Jul-2010

Also in Latin America, both TAM (-2.2%) and COPA (-1.4%) also declined, while GOL (-0.7%) slipped.

European Commission approves United/Continental merger

Elsewhere in the Americas, the European Commission announced it has cleared the proposed merger between United Airlines (-2.2%) and Continental Airlines (-1.7%) under European Union Merger Regulations. The carriers also announced their new executive team during trading. 

See related report: United Airlines and Continental shuffle executive ranks as EU approves merger

North & South America selected airlines daily share price movements (% change): 27-Jul-2010

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