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US Airways surprises investors; Alaska Air dips despite reporting net profit for 4Q2009

29-Jan-2010

North and South American carriers stocks slumped on Thursday (28-Jan-2010), amid a number of 4Q2009 and FY2009 results. Stocks also moved with the wider market, with the Dow (-1.1%) ending trading down, following poor outlooks from Motorola and Qualcomm, weakening optimism in the US technology sector.

The AMEX Airline Index (2.9%) consequently ended trading lower, with flat oil prices having little effect on equities.

US Airways surprises investors

US Airways (+5.8%) reported a smaller than expected net loss for 4Q2009 during trading, as well as narrowed losses for FY2009. A Reuters poll forecast the carrier would report losses of USD83.9 million for 4Q2009, or USD0.50 cents per share, on revenue of USD2.59 billion.

However, the carrier reported a net loss of USD79 million for the quarter, up from a loss of USD543 million in 4Q2008. Operating profit also improved, with the carrier reporting a loss of USD14 million for the period, compared to USD378 million in 4Q2008, despite a 4.9% year-on-year decline in revenue, to USD2,626 million.

Total revenues in 4Q2009 were down 4.9% year-on-year, due to a 1.8% decline in total ASMs and lower passenger yields. Total revenue per available seat mile (RASM) was USD13.02 cents, down 3.1%. Mainline passenger revenue per available seat mile (PRASM) in the 4Q2009 was USD9.93 cents, down 7.0%. Passenger numbers fell 5.4% for the quarter, while load factor dropped 0.2 ppts, to 79.8%.

Total operating expenses in the fourth quarter were down 16.8% due principally to a 14.6% decrease in mainline and Express fuel expense. Mainline CASM in 4Q2009 was USD11.82 cents, down 19.%. Excluding fuel and special items, mainline CASM was USD8.56 cents, up 0.8%, on a 1.8% decline in mainline ASMs.

Total operating expenses in the quarter were down 16.8%, due principally to a 14.6% decrease in mainline and Express fuel expense. Mainline CASM was USD11.82 cents, down 19.2%. Excluding fuel and special items, mainline CASM was USD8.56 cents, up 0.8%, on a 1.8%  decline in mainline ASMs.

Meanwhile for FY2009, the carrier reported a net loss of USD205 million, compared to a loss of USD2,215 million in the corresponding period last year. US Airways' operating loss for the year totalled USD118 million, compared to a loss of USD1,800 million in the corresponding period last year, as revenue fell 13.7%, to USD10,458 million.

Passenger numbers fell 6.9% for the year, while load factor gained 0.2 ppts, to 81.9%.

US Airways Chairman & CEO, Doug Parker, was upbeat, stating the results "reflect the extremely difficult environment the industry experienced in 2009. Given that environment, we are particularly pleased with the significant improvement in financial performance versus 2008. The actions we have put in place to address the challenges of the past two years - capacity cuts, a la carte revenues, cost control and a commitment to efficient operating reliability - are working. We enter 2010 with encouraging momentum and well positioned to take advantage of the improving economic environment”.

Standard & Poor's Equity Research upgraded US Airways’ stock from ‘Hold’ to ‘Buy’, forecasting strong unit revenue gains in 2010 due to “easy comparisons and improving demand”.

SmarTrend stated the carrier's stock is on an uptrend, with prices currently above its 50-day moving average of USD4.55 and 200-day moving average of USD3.66. US Airways ended trading on Thursday at USD5.14, up from lows below USD3 in early Nov-2009.

Alaska Air and JetBlue drop despite solid net profits

Alaska Air (-10.7%) took the biggest fall of the day, despite reporting a 4Q2009 net income of USD24.1 million, nearly a USD100 million swing from the year-ago period when it lost USD75.2 million. See related report: Alaska posts profit in fourth quarter and full year

Meanwhile, JetBlue (-7.9%) fell despite reporting its highest net income since 2003 in 2009, with a net profit of USD58 million.

Investors are increasingly concerned about rising cost profiles across the sector and the outlook for revenues in 2010.

 

Other news featured in today’s America Airline Daily includes:

  • Southwest Airlines Declares 134th Consecutive Quarterly Dividend;
  • US baggage fees not taxable; fuel surcharges taxable;
  • WestJet to launch Toronto-Bermuda service;
  • Caribbean tourism industry improves marginally in 2010.

North & South America selected airlines daily share price movements (% change): 28-Jan-2010


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