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WestJet expecting double-digit RASM reduction in 4Q2009; Ryanair pax up 15%; Tiger to launch an IPO

4-Dec-2009

WestJet, upon the release of its Nov-2009 traffic results, stated it anticipates revenue per available seat mile (RASM) to decline by 11-13% year-on-year in 4Q2009, an improvement from a 15.5% decline in 3Q2009, due to challenges experienced in the transition to its new SabreSonic reservations system.

The reduced unit revenues also reflect a reduction in the airline’s average fare, with CEO, Sean Durfy previously stating that WestJet is now offering more fare sales than it has in the past, as passengers continue to use discretion when purchasing fares amid the global financial downturn and competitor, Air Canada, adopts aggressive pricing strategies. 

However, Mr Durfy added that the carrier continues to be “pleased with our ability to profitably weather the 2009 economic environment, while moving forward with our strategic plans”.

Also in the month, WestJet reported a load factor of 75.9%, down 0.2 ppts from Nov-2008’s record level of 76.1%. Traffic (RPMs) increased 3.1% year-on-year, with capacity (ASMs) growth of 3.4%.

For more information on WestJet, see related article: WestJet expands in the US and Caribbean for Winter 2009-10 schedule

Ryanair pax up 15% in Nov-2009

Ryanair reported a 15% increase in passenger numbers to 5.0 million in Nov-2009, with a load factor increase of 1.0 ppts to 80%. (Comparatively, British AirwaysUK/European passenger numbers were down 3.3% to 1.4 million in the month, with load factors up 3.6 ppts to 64.9%).

For more information on Ryanair see related article: Ryanair announces 37th base: Oslo Rygge

Tiger to launch an IPO in Jan-2010

In the Asia Pacific region, Tiger Airways has reportedly hired three banks for its proposed IPO. The IPO, which is reportedly scheduled to be launched in Jan-2010, will be below the USD500 million previously speculated, and will help the carrier finance 50 A320s on order.

The carrier has reportedly selected Citigroup and Morgan Stanley as joint book-runners and lead managers of the sale, with DBS also appointed a joint lead manager.

Less than a week ago, it was reportedly that UK carrier Flybe plans to conduct an IPO, valued at approximately GBP300 million, in 2010. In recent months, a number of carriers, in addition to these two LCCs, have expressed their intention to launch IPOs in coming months, due to improving conditions on equity markets.

For more information, see related article: Flybe planning an IPO in London in 2010?

SpiceJet shares continue upward trend

SpiceJet's shares gained 10.1% yesterday. The Indian LCC has seen renewed investor interest in the past month - while the Bombay Stock Exchange’s 30-share Sensex has risen by 11.6% over the past month, Spicejet has experienced a gain of 61.8%. 

Contributing to the gains is the reduction in ATF this week, increased load factors and optimism of a potential turnaround in the current quarter. SpiceJet CCO, Samyukth Sridharan, earlier this week stating that “demand is back” and the carrier is “optimistic” about its financial performance of the next two quarters. 

Selected LCCs daily share price movements (% change): 03-Dec-09


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