Air Canada narrows losses in 4Q2009; Copa falls on declines in yield and RASM


The majority of North and South American carriers were down on Wednesday (10-Feb-2010) as terrible weather conditions on the US east coast played havoc with airline operations. However, Stifel Nicolaus analyst, Hunter Keay, told MarketWatch the increased number of flight cancellations is expected to have only a small impact on revenues.

Another rise in oil prices (+1.0%), to USD74.52, also pushed stocks down further. The AMEX Airline Index (-1.4%) ended trading down.
In the wider market, the Dow (-1.4%) dropped, as materials stocks fell and investors became concerned over Federal Reserve moves to gradually tighten the central bank’s credit policy.

Air Canada narrows loss in 4Q2009

Air Canada (+4.6%) was one of few carriers to gain on Wednesday, after it reported a smaller than expected 4Q2009 net loss of CAD83 million (USD78.4 million) compared to CAD146 million (USD138 million) in the year-ago period.

See related article: Air Canada: Edging back from the brink

Copa falls on declines in yield and RASM

Copa Holdings (-0.9%) fell after its yield per passenger mile decreased 11.7% to US 16.4 cents and operating revenue per available seat mile (RASM) decreased 5.8% to US 13.7 cents.

In more positive news, Copa beat analyst expectations, reporting net income of USD70.4 million for 4Q2009 or diluted earnings per share (EPS) of USD1.61, a year-on-year increase of 173.5%. Net income for FY2009 reached USD240.4 million or diluted EPS of USD5.50, a year-on-year increase of 102.6%.

However, operating income for 4Q2009 fell 17.8%, to USD71.8 million, representing an operating margin of 20.9%. Excluding special fleet charges of USD4.8 million, operating income would have been USD76.6 million, or an operating margin of 22.3% for the quarter, down from 24.3% in 4Q2008.

The carrier reported operating income of USD223.3 million for FY 2009, representing an operating margin of 17.8%, as compared to 17.4% in 2008. However, excluding special fleet charges of USD19.4 million recorded in 2009, the adjusted operating margin for 2009 stood at 19.4%.Total revenues for 4Q2009 decreased 0.9% to USD343.0 million.

For 4Q2009 consolidated passenger traffic (RPMs) grew 12.7% while capacity (ASMs) increased 5.2%. As a result, consolidated load factor for the quarter increased 5.3 ppts to 79.4%. For FY2009, consolidated capacity increased 12%.

Operating cost per available seat mile (CASM) decreased 1.6%, from 11.0 cents in 4Q2008 to 10.9 cents in 4Q2009. CASM, excluding fuel costs and special items, increased 5.2% from 7.2 cents in 4Q2008 to 7.6 cents in 4Q2009, mainly due to higher salaries and benefits and passenger related costs.

Cash, short term and long term investments ended 2009 at USD358.5 million, representing 29% of the last twelve months' revenues. During 2009 the Company funded from cash USD120 million in pre-delivery payments related to aircraft to be delivered between 2010 and 2011.

United and American withdraw from funding discussions with Chicago O’Hare Airport

United Airlines was flat, while American Airlines (-0.2%) slipped, following news the two have reportedly refused to continue financing discussions with Chicago O’Hare International Airport until the airport reviews its airport fees. O’Hare officials recently announced plans to increase its landing charges by 38% and rental rates by 15-17%. United and American were in discussions with the airport to help fund Phase II of its expansion project.

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North & South America selected airlines daily share price movements (% change): 10-Feb-2010

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