Air Arabia shares downgraded; Kenya Airways continues fall;

Air Arabia (-0.9%) slipped on Monday (29-Mar-2010) after HC Research cut its rating on the LCCs shares from ‘Buy’ to ‘Hold’, citing rising yield pressures, due to excess capacity and competition. The analysts also cut Air Arabia’s price target by 12%, to AED1.11.

HC Research noted Air Arabia’s early Summer fares, with discounts of over 40%, indicate the likelihood that yield pressure extended through to the peak period. The analysts added they do not expect strong dividend payments to continue, after the LCC announced a dividend payment of 10% of share capital for 2009. According to HC, this is holding Air Arabia’s share price up at present.

Elsewhere in the Middle East, Royal Jordanian's shares were flat, as the Amman Stock Exchange slipped 0.3%. Kuwait National Airways was also flat.

In Africa, Kenya Airways (-3.2%) continued to slide, while 1time Holdings (-1.7%) and Comair (-1.1%) were also down, as South Africa’s JSE All Share Index declined 1.4% on Monday. Lonrho was flat.

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Selected African and Middle Eastern airlines share price movements (% change): 29-Mar-2010