easyJet CEO to resign; Southwest Airlines downplays recovery talk; AirTran optimistic about 2010
easyJet (shares down 4.5% yesterday) confirmed that CEO, Andy Harrison, has indicated his desire to leave the company in order to seek "new challenges". Mr Harrison will remain in his current role until 30-Jun-2010, when it is anticipated he will step down from the Board and leave the company.
Mr Harrison is the fifth member of easyJet's eight-person management board to resign over the past 12 months, following a year marked by a public boardroom rift with Founder Sir Stelios Haji-Ioannou over the LCC's expansion strategy. In May-2009, following the other changes to the easyJet senior management team, the Board amended the terms of Mr Harrison's contract to put in place a retention agreement to ensure his presence as CEO through to at least 1Q2010.
Southwest Airlines downplays a recovery in premium demand
Across the Atlantic, Southwest Airlines (shares up 1.3% yesterday) CEO, Gary Kelly, was the only airline executive among the major US carriers to downplay a recovery in Business demand and revenues for 2010.
Mr Kelly, at the Next Generation Equity Research Conference in New York, stated, "I'm not comfortable enough to report any improvement in that market" adding that he expects that 2010 "won't see significant growth in business travel either".
Comparatively, American Airlines, Delta Air Lines, US Airways and United Airlines all expressed optimism that the worst appears to be behind the aviation industry in terms of revenue weakness and premium demand.
Select US airline expectations on 2010 recovery
|
Carrier |
Details |
|---|---|
|
Air Tran CFO, Arne Haak |
"I think everyone can agree the worst is behind us and things are improving" |
|
American Airlines Treasurer and VP, Beverly Goulet |
"I think we are seeing improvement in leisure and premium traffic at this point. While the domestic markets appear to have recovered at a faster pace than international routes, we're starting to see some improvement in those as well which has been driven by capacity reduction." |
|
American Airlines CFO, Kathryn Mikells |
"The good news is that there are signs of recovery on the horizon" |
|
Delta CFO, Hank Halter |
"When is unit revenue going to go positive? I think we've seen a steady step progression. I don't want to give a specific date or guidance, but clearly it's going to be in 2010 and likely it's going to be in the front half of 2010." |
|
Southwest CEO, Gary Kelly |
"Business travel still lags. I'm not expecting strong economic growth in 2010, and likewise I'm not expecting a rebound in business travel in 2010. We are raising fares. We are just trying to do that in a way that's positive to revenue and not negative." |
|
US Airways President, Scott Kirby |
"I think this is very indicative of a corporate demand recovery" |
AirTran optimistic about 2010
AirTran Airways CFO, Arne Haak, was also optimistic, stating the carrier expects to report a record profit in FY2009 and expects conditions in the US aviation industry to improve in 2010.
AirTran reduced capacity (ASMs) by 2-3% in 2009, but plans to increase capacity by 3-4% in 2010 and 2-3% in 2011 (however, this remains significantly below its growth of 20%+ in 2005-2007). The carrier added that domestic capacity is now at its lowest level in more than a decade.
The carrier's shares were 1.3% weaker yesterday.
Selected LCCs daily share price movements (% change): 09-Dec-09
Source: Centre for Asia Pacific Aviation & Yahoo! Finance