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Weak US markets pull down airline shares

7-Jun-2011

Weakness across US markets have pulled North and South American airline shares down, with US and Brazilian carriers among the worst affected despite an easing of oil prices below USD100 per barrel. Republic Airways shares fell 4.3%, US Airways was down 3.8% and American Airlines lost 3.7%, while GOL was also 3.7% lower and TAM lost 3.5%.

Canadian carriers Air Canada and WestJet reported the following traffic highlights for May-2011

Air Canada:

  • Revenue passenger miles: +5% year-on-year;
    • Domestic: +0.3%;
    • US: +13%;
    • Europe: +3.9%;
    • Asia Pacific: +6.8%;
    • Latin America and other: +8.9%;
  • Passenger load factor: 82.2%, +0.2 ppt
    • Domestic: 79.6%, -0.4 ppt;
    • US: 78.6%, +4.8 ppts;
    • Europe: 82%, -2.4 ppts;
    • Asia Pacific: 90.1%, -0.3 ppt;
    • Latin America and other: 82.3%, +2.5 ppts.

WestJet:

  • Revenue passenger miles: +3.1% year-on-year;
  • Passenger load factor: 74.8%, -2.9 ppts.

Air Canada flight attendants have asked for a federal conciliator to assist in contract negotiations. The Canadian Union of Public Employees (CUPE), the union representing 6800 Air Canada flight attendants, filed the request with the Federal Mediation and Conciliation Services after reaching an impasse with management on several issues. The collective agreement between the flight attendants and Air Canada expired Dec-2010. Negotiations for a new contract have been underway since 06-Apr-2011 but so far a settlement has eluded the parties.

Allegiant Air and American Airlines also reported May-2011 traffic highlights:

Allegiant Air:

  • Passenger numbers: 464,983, -3.7% year-on-year;
  • Passenger load factor: 88.1%, +0.2 ppt;
  • Flights: 3,785, -3.7%;
    • Apr-2011:
  • Scheduled revenue per ASM: +23.9%;
    • May-2011*:
  • Scheduled revenue per ASM: 34.6% to 35%.

American Airlines announced (06-Jun-2011) the following traffic highlights in May-2011:

  • Passenger numbers: 7.4 million, -0.3% year-on-year;
  • Revenue passenger miles: +1.3%;
    • Domestic: -0.9%;
    • International: +4.9%;
    • Europe: +2.3%;
    • Latin America: +4.2%;
    • Asia Pacific: +16.8%;
  • Passenger load factor: 83.3%, +0.5 ppt;
    • Domestic: 86%, +1.6 ppts;
    • International: 79.5%, -0.9 ppt;
    • Europe: 81.2%, -2.7 ppts;
    • Latin America: 79.3%, +3.6 ppts;
    • Asia Pacific: 75.4%, -11.3 ppts.

Selected Americas airlines share price movements (% change): 6-Jun-2011


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