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United Airlines investors expecting erosion in share price; American Airlines up


The majority of North and South American carriers’ shares gained on Tuesday (16-Feb-2010), despite a 3.9% rise in oil prices, to USD77.01.

In the wider market, the Dow (+1.7%) gained, led higher by banking and energy stocks, after the Bank of America announced “significant gains” in its number of modified mortgages handled through the US Government’s Home Affordable Modification Program and Barclays reported better than expected results for FY2009.

Expressjet rises on improved traffic

Expressjet (+5.0%) witnessed the biggest gain of the day after reporting a 3.8 ppt year-on-year improvement in load factor for Jan-2010, to 72.0%, as the result of a 15% increase in traffic (RPKs) and 9% increase in capacity.

American Airlines (+3.9%) also witnessed solid gains in the first day of trading since the US Department of Trading recommended approval of the carrier’s antitrust immunity with British Airways and other oneworld alliance partners, British Airways, Iberia, Finnair and Royal Jordanian. See related report: DoT grants British Airways-American Airlines, oneworld anti-trust immunity

United Airlines investors expecting erosion in share price

LAN (-0.2%) and United Airlines (-1.7%) were the only two carriers to witness a decline in share price for the day, after a number of bearish investors placed put options on United’s stocks. According to Forbes, approximately 21,500 puts options were purchased at the March USD15 put price for an average premium of USD1 per contract. Investors presumably expect United’s shares to continue to erode. 

In other United Airlines news, Chairman and CEO, Glenn Tilton, stated he is interested in renewing merger talks with Continental, citing investors' reaction to the successful Northwest/Delta merger. Mr Tilton stated in an interview with The Financial Times that “the investor seems to have spoken. The market seems to have suggested that scope and scale in a global business are important”. See related article: Investors like mergers says United Airlines CEO, Glenn Tilton

Continental, United, Delta, American and Hawaiian apply for Tokyo Haneda slots

Meanwhile, Continental Airlines (+1.1%), United Airlines (-1.7%), Delta Air Lines (+1.9%), American Airlines (+3.9%) and Hawaiian Airlines (+2.7%) separately submitted or announced plans to submit applications to the US Department of Transportation to provide services from select US destinations to Tokyo Haneda Airport. The carriers are seeking rights under the Dec-2009 Japan-US open skies agreement, which is anticipated to come into force later this year. See related article: US airlines jump at first opportunity at Tokyo Haneda Airport in 30 years

Other stories in today’s America Airlines Daily include:

  • US BTS reports 2% rise in Nov-2009 passenger traffic;
  • American Airlines takes delivery of 111th B737 (NG) aircraft;
  • Continental Airlines’ former CEO, Larry Kellner names three issues within US aviation;
  • Jamaica’s Office of the Contractor General informs JALPA to acquisition cease efforts;
  • Mexico's Tourism Ministry reports 15% fall in 2009 foreign tourist expenditure.

North & South America selected airlines daily share price movements (% change): 16-Feb-2010

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