Alaska Air and UPS shares slip despite improved net profit, United Continental makes minor gain

Alaska Air (-0.3%) slipped despite the group reporting a 39.7% year-on-year improvement for 3Q2010, to USD122.4 million or USD3.21 per diluted share. Operating profit for the period also made a significant improvement, rising 35.4% to USD216.4 million. The result was on a 10.3% increase in revenue, to USD1,068 million, outweighing the 5.4% rise in operating costs, to USD851.1 million.

UPS (-0.1%) also slipped despite CFO Kurt Kuehn stating it plans to raise its FY2010 guidance with adjusted earnings per share expected to grow more than 50% over last year. The freight carrier reported a 80.5% rise in net profit for 3Q2010, to USD991 million, during trading.

CEO, Scott Davis stated the company continues to plan for a “slow-growth economic environment”, adding “some inventory rebuilding has occurred this year, but due to the low inventory-to-sales ratios and other indices, it appears that there may still be room for additional restocking”.

United Continental Holdings (+0.6%), formerly UAL Corp, made a minor gain for the day after United Airlines reported a net profit of USD387 million, compared to a loss of USD57 million in the previous corresponding period. Operating profit made a significant rise, up 508%, to USD535 million. The result was on a 21.7% gain in revenue for the period, to USD5,394 million. The result just missed analysts' expectations. Analysts on average had expected revenue of USD5,410 million, according to Bloomberg.

Continental also reported improved results for the quarter, with a net profit of USD354 million, compared to a loss of USD18 million in the previous corresponding period. Operating profit rose 623% for the quarter, to USD441 million, on a 21.7% rise in revenue, to USD5,394 million. Analysts on average had expected revenue to reach USD3,910 million, according to Bloomberg.

United Continental CEO Jeff Smisek stated the carrier's profit margins face a more challenging "couple of quarters", due to the seasonally weak travel season over winter and higher fuel prices. Similarly, CFO Zane Rowe stated higher fuel prices would make the "next couple of quarters...more challenging".

JetBlue (-4.8%) declined and Southwest Airlines (+3.5%) gained after they also reported results for 3Q2010.

Based on results from 20-Oct-2010 and 21-Oct-2010, the US eight major airlines reported a combined profit of USD2.44 billion. The result beat forecasts from CRT Capital Group LLC’s Michael Derchin, who expected a combined profit of USD2.4 billion, and Deutsche Bank AG’s Michael Linenberg, who estimated a combined profit of USD2.3 billion.

Delta rises on upgrade

Delta Air Lines (+4.3%) also rose for the day after Standard & Poor's raised its ratings outlook on the carrier from ‘Negative’ to ‘Stable’, due to improved operating performance, which it stated has strengthened its credit ratio. The analysts have a ‘B’ corporate credit rating on the carrier.

Elsewhere, Air Canada (+6.4%) made strong gains for the day, while Atlas Air (-2.5%) continued to decline.

North & South America selected airlines daily share price movements (% change): 21-Oct-2010