14-Apr-2010 4:30 PM

Vueling up, Iberia down on traffic results; Air France to benefit from Amadeus IPO; Ryanair slips

Analysis

A slight majority of European carriers' shares were down on Tuesday (13-Apr-2010), falling with the wider markets. European markets were pushed lower by a weak lead from Wall Street, a decline in banking shares and oil prices, which ended trading down 0.3%, to USD84.05.

In key markets, UK's FTSE (-0.3%), France's CAC (-0.5%) and Germany's DAX (-0.3%) were all down at the end of the session.

Vueling gains on rise in traffic

Vueling (+1.1%) gained after reporting a 118.1% year-on-year rise in passenger numbers in Mar-2010, to 864,000 (following its merger last year with clickair). Load factor for the month rose 6.2 ppts, to 74.9%, on a 108.4% rise in traffic (RPKs) and a 91.2% increase in load factor (ASKs).

Air France to benefit from Amadeus IPO

Air France-KLM (+0.9%) also rose after estimating its share of Amadeus' planned IPO could be between EUR235.5 million and EUR280 million, assuming an enterprise value of EUR6.7 billion to EUR8 billion for Amadeus. Amadeus plans to conduct the 25% IPO this year. The company is 45% owned by Air France-KLM, Iberia and Lufthansa.

Ryanair and easyJet slip despite initiated coverage

Ryanair (-0.3%) and easyJet (-0.5%) both slipped. HSBC initiated coverage of the LCCs with positive ratings. The analysts rated Ryanair shares as 'Neutral' and easyJet shares as 'Overweight'.

HSBC also raised Air France-KLM (+1.7%), Lufthansa (-0.6%) and British Airways' (-1.3%) price targets as follows:

Air France-KLM: from EUR15 to EUR16, rating 'Overweight';
Lufthansa: from EUR15 to EUR16, rating 'Overweight';
British Airways: from GBP230 pence to GBP260 pence, rating 'Neutral'.

Lufthansa to retain bmi

bmi CEO, Wolfgang Prock-Schauer, stated the carrier is "here to stay" and Lufthansa has no plans at present to sell the carrier, instead planning to focus on restructuring efforts. However, Mr Prock-Schauer conceded that Lufthansa could decide to sell the airline at some point. The CEO stated losses for bmi in 2009 would be worse than the pretax loss of GBP157.3 million recorded in 2008, but the restructuring programme would help halve losses in 2010.

Iberia down despite improved load factor

Iberia (-2.2%) took the biggest fall of the day after the carrier reported a 3.2% decline in traffic (RPKs) and a 6.6% reduction in capacity (ASM) for Mar-2010, leading to a 3.0 ppts rise in load factor.

Elsewhere, Dart Group (+1.7%) and Turkish Airlines (+1.6%) were the day's biggest gainers, while SAS (-1.5%) and British Airways (-1.3%) were down.

Europe Airline Daily is an efficient morning briefing on European airline developments. Other stories featured in today's issue include:

US considering expanding agreements to liberalise aviation markets;
Boeing launches B787 GoldCare service with TUI Travel;
British Airways cabin crew pay level up 5% in 2009;
NIKI and Air Berlin to increase operations to Italian market;
China Southern Airlines and KLM commences codeshare agreement.

Europe selected airlines daily share price movements (% change): 13-Apr-2010