The majority of North and South American carriers’ stocks ended trading up on Tuesday (03-Nov-2009), following a round of improved Oct-2009 traffic results. As a result, the AMEX Airline Index was up 1.3%, despite a slip in the Dow (-0.2%) and an increase in oil prices (+1.5%), to USD78.13.
Continental Airlines (+2.3%) reported a 3.5 ppts year-on-year increase in load factor for Oct-2009, to 82.5%. The improvement came as traffic (RPMs) rose 1.7%, while capacity (ASMs) were reduced 2.6%. Overall, passenger numbers fell 1.0%, to 5.1 million passengers.
Continental estimated consolidated passenger revenue per ASM (RASM) to have decreased between 14.0% and 15.0% year-on-year, while mainline RASM is estimated to have decreased between 15.0% and 16.0%. For Sep-2009, consolidated passenger RASM decreased 19.2%, while mainline passenger RASM decreased 21.1%.
United Airlines (+3.1%) also saw an improvement in load factor, up 2.3 ppts, to 83.1% in Oct-2009. The carrier’s load factor was up as a reduction in capacity (-4.3%) outweighed the fall in traffic (-1.6%). Passenger numbers meanwhile fell 3.5%, to 7 million passengers.
Republic Airways, meanwhile reported a 6.3 ppts increase in load factor for Oct-2009, to 79.3%, as the result of a 121.8% improvement in traffic and 104.4% increase in capacity. Passenger numbers also made a significant gain, up 78.1%, to 2.8 million passengers. The impressive increases follow the carrier’s completion of the company's acquisition of Frontier Airlines on 01-Oct-2009.
Competitors, AirTran (-0.7%) and Allegiant (+1.5%) in comparison, saw a decline in load factors.
Pinnacle Airlines reported a 6% year-on-year improvement in net income for 3Q2009, to USD11.4 million, with fully diluted earnings per share of USD0.62. The rise came as consolidated operating income increased 13%, to USD21.1 million.
The increase in net income can be partly attributed the number of Pinnacle’s of transactions during the quarter to increase its liquidity in preparation for 1Q2010, when holders of its remaining outstanding 3.25% senior convertible notes may require the Company to repurchase the notes. Transactions included:
- The completion of a USD25 million, three-year term loan financing with C.I.T. Leasing;
- The sale of its portfolio of ARS as part of a settlement with a financial institution. After repayment of a related credit facility, the carrier netted an additional USD27 million in cash proceeds from the sale;
- The repurchase of approximately UDS78 million par value of the convertible notes at a purchase price of USD75 million. After completion of this purchase, approximately USD31 million par amount of the notes remains outstanding.
ACE Aviation Holdings confirmed it is no longer the majority stakeholder in Air Canada (+7.6%), following the carrier’s issue of 160.5 million new shares. The company did not purchase any of the new shares, resulting in a decrease in its equity stake in the carrier from 75% to 27%. ACE currently holds 75 million shares in Air Canada. However, ACE stated that, in line with a credit agreement, it has received 1.3 million warrants to purchase Air Canada shares at an exercise price of CAD1.44 each, and another 1.3 million warrants at an exercise price of CAD1.51 each.
Air Canada was up 7.6% on the back of its improved rating from Genuity the day prior (02-Nov-2009).
North & South America selected airlines daily share price movements (% change): 03-Nov-09
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