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TAM, Continental, UPS on the rise; US carriers fall on fare hike

5-Jan-2010

North and South American carriers’ stocks were mixed on Monday (04-Jan-2010), with the majority of US carriers down as oil prices surged again, rising 2.2% to USD81.51 per barrel. The AMEX Airline Index rose only 0.5% as a result. The Dow meanwhile rose 1.5%.

US legacy carriers increase fares

Farecompare.com stated some legacy carriers increased their fares ahead of the New Year’s weekend. Carriers including Delta Air Lines (-1.4%), US Airways (-1.5%), American Airlines (-0.1%), Continental Airlines (+1.2%) and Alaska Air (+0.9%) followed United Airlines in increasing return fares by USD6-USD10. The increase was the fourth fare hike of 2009, compared to 15 increases in 2008 and 17 in 2007. 

TAM reaches highest level in 15 months

TAM (+3.1%) made the greatest gain during trading, rising to its highest level in 15 months. The rise came after the carrier announced its dividend payments of BRL0.15627 per share. TAM’s shares ended the day at BRL39.20, after earlier reaching BRL39.39. The Bovespa also gained on Monday, up 2.1% at the end of trading.

Continental CEO to forego salary until carrier reports full year profit

Continental Airlines (+1.2%) meanwhile rose after announcing new CEO, Jeffery Smisek, will forgo his USD730,000 annual salary or bonus until the carrier reports a full year profit. Mr Smisek stated the tone of any business is set at the top, and urged staff to “take control of our destiny”.

The carrier reported a loss of USD376 million in the first nine months of 2009. However, Continental is expected to report a profit of approximately USD190 million in 2010, according to a Thomson Reuters poll of analysts.

UPS upgraded

UPS (+1.4%) was also up after analysts at Robert W Baird & Co upgraded its outlook of the freight carier from ‘Neutral’ to ‘Outperform’ and increased its price target to USD70. The analysts cited improved weight per shipment, increased volume of international shipments, improved pricing and cost reductions as reasons behind the upgrade.

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


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