Air Canada, GOL, FedEx stand out as market rises. But American Airlines, Continental out of favour
Air Canada (+7.7%), GOL (+6.2%) and FedEx (+4.8%) stocks were the day’s best movers on Tuesday, while the Dow Jones index moved up a healthy 2.4% on stronger consumer sentiment news. This did nothing for Continental (-1.8%) or American Airlines (-1.1%) though. If in fact consumer sentiment surveys genuinely reflect spending intentions, it should be the airline sector which is an early beneficiary.
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North & South America selected airlines daily share price movements (% change): 26-May-09
GOL again continued its upwards movement, thanks to the lower level of concern over the airline’s funding arrangements.
Likewise, since some of the value has been removed from FedEx’s capitalisation, a slightly less negative outlook from analysts helped to restore some momentum yesterday.
Air Canada is in final “round-the-clock” negotiations with the Canadian Auto Workers Union which looks after 4,500 of the airline’s sales and check-in staff. The union is one of the more aggressive and has concerns about Air Canada’s plans for a pension moratorium while rectifying its pension deficit. But the talks are moving along. And the carrier also benefited from a tentative deal (“MoU”) with a credit card processor to reduce the level of unrestricted cash which Air Canada must maintain; this would help with cash flow – and will put pressure on other suppliers to follow suit.
All of this is helping to relieve a little of the immediate concern over Air Canada’s survival prospects.