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LAN Airlines passenger numbers up 16.5% in Jul-2010; TAM enhancing measures to increase demand

10-Aug-2010

North and South American airline stocks soared higher on Monday (09-Aug-2010) as airlines continued to report improved traffic results and wider markets gained. The Dow (+0.4%) edged slightly higher, as investors became cautious in afternoon trading ahead of the US Federal Reserve’s meeting on 10-Aug-2010.

Latin American markets meanwhile moved marginally higher. Brazil’s Bovespa (-0.3%) slipped for a second consecutive day on profit taking by investors. Chile’s IPSA (+0.7%) meanwhile made significant gains, with the market recording a new intra-day high for the sixth consecutive day. The index has been consistently posting new highs since Jun-2010, due to stronger than expected economic growth.

LAN Airlines passenger numbers up 16.5% in Jul-2010

LAN Airlines (+4.4%) soared after reporting a 16.5% year-on-year rise in passenger numbers for Jul-2010, to 1.5 million.

The carrier stated system passenger traffic for the month increased 14.5%, as capacity rose 9.9%. As a result, LAN’s load factor increased 3.2 ppts, to 79.2%.

Domestic passenger traffic in Chile, Argentina, Peru and Ecuador rose 17.6%, as capacity increased 8.9%. As a consequence, the domestic load factor for the month increased 5.8 ppts, to 78.9%.

International passenger traffic for Jul-2010 grew 13.3%, while capacity increased 10.3%. Accordingly, the international passenger load factor for the month increased 2.1 ppts, to 79.4%. During the month, international capacity was mainly driven by an increase in operations on routes to the US, as well as certain Regional routes. International passenger traffic accounted for approximately 70% of total passenger traffic.

In terms of freight, cargo traffic increased 20.7%. This increase was mainly due to the recovery in imports to Latin America driven by Brazil and the increase in operations to Europe with the B777-200 freighter fleet. In line with higher demand, capacity grew 19.7%. As a result, the cargo load factor rose 0.5 ppts, to 67.9%.

TAM enhancing measures to increase demand

TAM (+0.4%) gained only marginally for the day. The carrier stated in the previous session it is introducing new products, selling tickets through the Casas Bahia retail chain, and conducting a new marketing campaign as part of new measures being taken to increase demand, especially to the new Brazilian middle class. The efforts are part of a new retail product, launched on 08-Aug-2010, which also involves the inauguration of TAM Viagens franchise offices. The carrier added that 75% of its passengers currently travel for business purposes.

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GOL net income plummets

GOL (-0.9%) was one of only two carriers down for the day after the carrier reported a net loss of BRL51.9 million (USD29.7 million) for 2Q2010, compared to a net profit of BRL353.7 million in the previous corresponding period.

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See related CAPA Profile: Low Cost Carriers (LCCs)

Elsewhere, Allegiant (+5.0%) was the biggest gainer of the day, with JetBlue (+4.2%) and United AIrlines (+4.1%) also performing well. Hawaiian Airlines (-0.4%) slipped.

North & South America selected airlines daily share price movements (% change): 09-Aug-2010


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