Air Canada stock upgraded; new United Airlines to be world’s largest carrier - in some respects

North and South American airline stocks were mixed on Tuesday (11-May-2010) as falls in the Dow (-0.3%) and oil prices fell 0.6% to USD76.37. The AMEX Airline Index (-0.2%) slipped as a result.

Air Canada stock upgraded

Air Canada (-0.9%) declined despite analysts at Citigroup upgrading their rating of the carrier’s stock from ‘Hold’ to ‘Buy’, also increasing the price target from CAD2 to CAD4. Citigroup cited a strong revenue environment, expected liquidity enhancement and a pullback in the stock. Despite 1Q2010 revenue just meeting the analysts' expectations, Citigroup identified a number of factors pointing to an improved revenue performance this year, including a rise in load factor for the quarter. The company also cited improving yields and WestJet's (+0.2%) expectation of unit revenue gains in 2Q2010.

Citigroup expects Air Canada to outperform the LCC this year. For FY2010, the analysts expect Air Canada to report earnings per share of CAD0.25, compared to a loss of CAD0.34 per share in FY2009.

New United Airlines to be world’s largest carrier in some respects

Continental Airlines (+0.8%) and United Airlines (+0.6%) were both up yesterday. OAG released an analysis of the potential merger between the two carriers, showing the merger would create the largest airline in the world by many measures – airline revenue, available seat miles (ASMs) and revenue passenger miles (RPMs) – both within the United States and worldwide. Delta Air Lines (+0.8%) today is the leader in all of those categories.

The new United Airlines will be second to Delta in terms of worldwide seat departures, and third behind Delta and Southwest Airlines (-0.8%) in domestic seats. American Airlines (-0.4%) will move from second to third in US and worldwide ASMs, and from third to fourth in total and domestic seats.

Elsewhere, Republic Airways (+3.9%) was the day’s biggest gainer, followed by Alaska Air (+2.0%).

On-time performance improves for US carriers

US Department of Transportation announced during trading that on-time performance for the nation’s largest airlines in Mar-2010 improved year-on-year and compared to Feb-2010. According to information filed with the Bureau of Transportation Statistics (BTS), the 18 carriers reporting on-time performance recorded an overall on-time arrival rate of 80.0% for the month, better than the 78.4% on-time rate of Mar-2009 and Feb-2010’s 74.6%.

The carriers posting the highest on-time arrival rates included Hawaiian Airlines at 90.2%, Alaska Airlines at 87.3% and Pinnacle Airlines at 84.2%.

Meanwhile, the carrier’s with the lowest rates included JetBlue at 72.1%, ExpressJet at 75.1% and American Airlines at 76.1%.

America Airline Daily is your one-stop shop for news, data and analysis from the dynamic North American, Caribbean and Latin American aviation markets. Other stories featured in today’s issue include:

  • ATA to seek legal review of unprecedented NMB labour rule;
  • Allegiant Travel Company announces executive appointments;
  • Delta adds flights between New York and key business markets;
  • Southwest Airlines announces intent to serve South Carolina.

North & South America selected airlines daily share price movements (% change): 11-May-2010