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Southwest trumps JetBlue, US Airways and Continental in the yield growth stakes in Dec-2009

12-Jan-2010
  • Southwest trumps JetBlue, US Airways and Continental in the yield growth stakes;
  • Fourth consecutive month of RASM growth for Southwest;
  • Eight months of PRASM reductions in Dec-2009 for JetBlue;
  • Continental reports best PRASM performance since Dec-2008;
  • US Airways seeing “positive trends” in yields and corporate revenue;
  • 2009 ends better than its start.

Southwest continued to trump JetBlue, US Airways and Continental Airlines in the yield growth stakes in Dec-2009, with the US LCC the only carrier to report yield growth in the month. JetBlue, US Airways and Continental all reported PRASM contractions of between -2% and -4.5% last month.

Southwest traffic highlights: Dec-2009

  

PRASM

RASM

Southwest (Estimated)

+7%

n/a

JetBlue (Estimated)

-3%

n/a

US Airways (Estimated)

-2%

-1%

Continental (Estimated)

-3.5% to -4.5%

-4.5% to -5.5%

Fourth consecutive month of PRASM growth for Southwest

Southwest, the largest US LCC, stated it expects PRASM to have increased in the 7% range in Dec-2009 – for the fourth consecutive month of increases. It follows Nov-2009’s double-digit improvement.    

Southwest PRASM year-on-year increase: Jan-2009 to Dec-2009

Eight months of PRASM reductions in Dec-2009 for JetBlue

JetBlue, meanwhile, reported a 3% reduction in PRASM in Dec-2009 (off last year’s positive base of 15%), for eight consecutive months of PRASM reductions.

JetBlue PRASM year-on-year increase: May-2007 to Dec-2009

Using a 12-month moving average, JetBlue’s PRASM was 4.3% weaker in Dec-2009, for the lowest level in the past 24 months and illustrating the effect of ongoing economic weakness on the LCC’s yields

JetBlue 12 month moving average for increases in PRASM: Apr-2008 to Dec-2009

Continental reports best PRASM performance since Dec-2008

Continental Airlines reported an encouraging set of traffic results for Dec-2009, with the smallest yield contraction in 12 months. 

During Dec-2009, consolidated PRASM is estimated to have decreased between 3.5% and 4.5%, while mainline PRASM is estimated to have decreased between 4.5% and 5.5%.

For Nov-2009, Continental Airlines confirmed that consolidated PRASM decreased by 8.5%, at the higher end of the carrier’s estimate of a 7-9% reduction, while mainline PRASM decreased by 9.8%, also at the higher end of its estimate of a 8-10% reduction.

Continental Airlines consolidated PRASM (US cents per ASM): Feb-2008 to Dec-2009

Looking at a two-year range, Continental’s Dec-2009 PRASM increased by 0.5% over Dec-2007 (when the US entered recession). 

Continental Airlines’ consolidated PRASM growth (two year range): Feb-2009 to Dec-2009

Increasing cash balance

Continental ended 4Q2009 with an unrestricted cash, cash equivalents and short-term investments balance of approximately USD2.85 billion (up from USD2.55 billion at the end of 3Q2009 and USD2.77 billion at the end of Jun-2009). This is ahead of the carrier’s previous expectations, reported only one month ago, that it would end 2009 with a balance of approximately USD2.5 billion.

US Airways seeing “positive trends” in yields and corporate revenue

US Airways President, Scott Kirby, stated that the carrier’s consolidated (mainline and Express) PRASM decreased by approximately 2%, while total revenue per ASM decreased by approximately 1%, in Dec-2009.

Mr Kirby added,  “as we close calendar year 2009, we are pleased our revenue performance continued to show improvement with positive trends in both booked yields and corporate revenue”.

US Airways’ RASM and PRASM growth (%): Jan-2009 to Nov-2009

2009 ends better than its start

After an extremely challenging year for all US airlines, 2009 has ended with signs of optimism on the yield front. 

According to ATA VP and Chief Economist, John Heimlich, in ATA’s 2010 Airline Industry Economic Perspective, the best news ending 2009 is that many airlines are “reporting a steady upward trend in bookings going into the new year, including premium seating for business customers”. He added that this is “cause for optimism” after a year that saw US airlines’ yields being severely battered. 

However, Mr Heimlich also warned that, despite there being “numerous reasons that 2010 might indeed bring better times” for the airlines,  it is “important to remember that ‘better than 2009' is not saying a whole lot in the grand scheme”.  


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