Alaska Air boosted by Standard & Poor’s; Continental to sell senior secured notes

North and South American airline stocks rose on Monday (02-Aug-2010) after Moody's Investors Service announced it expects demand to continue to improve over the next several quarters. A 2.0% rise in the Dow also pushed shares higher, with investors buying on better-than-expected manufacturing and construction data.

The AMEX Airline Index advanced 2.6% as a result. The gains were despite oil prices rising 3.0% for the day, to USD81.34.

Alaska Air boosted by Standard & Poor’s

Alaska Air Group (+2.6%) gained after Standard & Poor's raised its rating of the group’s stock from B to B+ on consistent financial results, expected future performance and a healthy cash balance. Alaska Air has earned a net income of USD175.6 million over the past four quarters, compared with a loss of USD153.2 million in the previous corresponding period.

See related CAPA Profile: Outlook, Forecasts, Guidance

United's debt ratings upgraded

United Airlines (+1.8%) also rose after Moody's Investors Service upgraded UAL Corp’s debt ratings. The agency lifted the company’s corporate family and probability of default ratings from Caa1 to B3, citing the carrier’s improving liquidity since the start of 2010. Moody’s stated this was the result of controlled growth and strategic cuts, a strong trans-Pacific network and US west coast hubs.

See related CAPA Profile: Market Share

The agency stated it may again upgrade the carrier when it merges with Continental, depending on labour agreements and other aspects.

Continental to sell senior secured notes

Continental Airlines (+2.3%) proposes to offer, subject to market and other conditions, USD750 million aggregate principal amount of senior secured notes due 2015. Continental intends to use approximately USD350 million of the net proceeds from the offering to repay the secured term loan facility and the balance for general corporate purposes.

Moody’s affirmed a B2 corporate family rating for the carrier, with a negative outlook.

Elsewhere, Expressjet (+6.7%) and Delta Air Lines (+6.1%) were the day’s biggest gainers. Air Canada (-5.2%) and WestJet (-3.4%) continued their recent decline, ahead of reporting their 1Q2010 earnings results this week. 

North & South America selected airlines daily share price movements (% change): 02-Aug-2010