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US airline stocks savaged as the US recovery loses steam, domestic yield growth slows

21-May-2010

US stocks yesterday suffered their biggest points fall since Feb-2009, with the Dow Jones industrial average plunging 376 points or 3.6% to 10,068. The Dow has now fallen 10.2% since reaching its 2010 high on 26-Apr-2010.

Expressjet slumped 15.1%, Air Canada lost a further 9.3%, United dropped 6%, Continental 5.4% and Delta 5.3%.

The Conference Board’s Leading Economic Index for the US declined 0.1% in Apr-2010, suggesting that through a recovery that will continue through the Summer, “it could lose a little steam”.

US Leading Economic Index and Coincident Economic Index: Jan-2007 to Apr-2010

Domestic yield growth slows

The Air Transport Association meanwhile issued its monthly passenger yield report showing double digit increases in yield across most regions during Apr-2010. Domestic yields, which rose 12.0% in Mar-2010 gained by 11.5% in Apr-2010.

ATA Monthly Passenger Yield (Cents per RPM) 

2010

DOMESTIC

ATLANTIC

LATIN

PACIFIC

¢/RPM

% Change

¢/RPM

% Change

¢/RPM

% Change

¢/RPM

% Change

January

14.20

0.7

12.45

4.6

13.98

(4.8)

11.93

(1.7)

February

14.36

5.7

12.55

9.3

13.14

0.4

11.47

(0.1)

March

15.02

12.0

12.33

17.6

13.31

6.7

12.24

7.7

April

15.06

11.5

12.20

23.4

13.77

9.3

12.34

22.1

2010 YTD

14.69

7.7

12.37

14.1

13.56

2.5

12.01

6.3

The Atlantic and Pacific routes showed the greatest gains with over 20% increases in yields. The Atlantic yield jumped 23.4% to 12.20 cents per revenue passenger mile. It was followed closely by the 22.1% increase in Pacific yield to 12.34 cents per RPM, reflecting the strong return of business passengers. Latin American yield rose 9.3% to 13.77 cents while domestic yield jumped 11.5% to 15.06. The performance is the fourth consecutive month for yield hikes for domestic and Atlantic regions, the third for Latin and the second for the Pacific region.

ATA yield growth: Feb-2008 to Apr-2010

A 12-month moving average shows yields are improving, but remain well below pre-crisis levels.

ATA yield: 12 months moving average

Bowler retires from American Eagle

Elsewhere, American Eagle, CEO, Peter Bowler announced his retirement yesterday after a 26-year career at American and 12 years heading the regional carrier. He will stay on in his current role until a successor is named. He was also a member of American’s Executive Committee.

"It has been the highlight of my airline career to be the president and CEO of American Eagle," said Bowler. "I am grateful for the opportunity to have served with the wonderful people of American Eagle and am proud of the fact that we have successfully navigated more than 11 years of constant change."

Chair and CEO Gerard Arpey praised Bowler’s contribution to the company. "With a comprehensive understanding of the airline business and a deep concern for Eagle's people, he has overseen the transition of American Eagle to one of the largest regional jet operators in the world, offering over 1,600 flights a day to destinations throughout the U.S., Canada, the Caribbean and Mexico,” said Arpey. “I offer my sincere thanks for his leadership and many contributions to American and American Eagle.”

American Airlines’ shares slumped 6.9% yesterday.

North & South America selected airlines daily share price movements (% change): 20-May-2010


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