Alaska Air posts first significant 1Q profit since 1999; Continental Airlines losses narrow


The majority of North and South American carriers' stocks gained on Thursday (22-Apr-2010) as the airlines resumed operations to Europe with the reopening of the region's airspace. Improved financial results from Alaska Air and Continental Airlines also impressed the market.

  • North and South American carriers' stocks gain as European airspace reopens.
  • Alaska Air reports significant first-quarter profit, the first since 1999.
  • Continental Airlines narrows net loss and reports improved revenues.
  • US Airways discontinues merger talks with United Airlines.
  • Southwest Airlines reports a net profit for the first quarter.
  • American Airlines' stock falls as UBS lowers its price target.

The wider market was relatively flat, with the Dow (+0.1%) up only marginally, after President Obama stated the economy is recovering, but that further progress is required to help the millions of unemployed US citizens. President Obama attributed the US recession to Wall Street and restated he plans to overhaul financial markets.

Alaska Air posts first significant first quarter profit since 1999

Alaska Air (+2.2%) gained after the group reported a USD5.3 million net profit for the three months ended 31-Mar-2010, compared to a loss of USD19.2 million in the corresponding period last year. Operating profit totalled USD26 million, compared to a loss of USD12 million in the corresponding period last year.

For Alaska Airlines, the carrier reported a 1.9% year-on-year improvement in passenger numbers, to 3.6 million. Load factor for the quarter rose 5.0 ppts, to 80.7%. Yield (per RPM) rose 1.6%, while operating costs (per ASM) were up 6.4%

Chairman and CEO, Bill Ayer, stated this was the first time the group had reported a significant first quarter profit since 1999. According to Mr Ayer, posting a profit in seasonally its weakest quarter is "particularly noteworthy".

As a result, Standard and Poor's Equity raised its rating for the carrier's stock from 'Hold' to 'Buy'.

Continental Airlines reports narrower net loss

Continental Airlines (-0.1%) slipped after reporting a narrower net loss of USD51 million for 1Q2010, compared to a loss of USD55 million in the corresponding period last year. Operating losses also improved, totalling USD51 million, compared to a loss of USD55 million in the corresponding period last year.

More positively, revenues gained 7.0% for the quarter, to USD3,169 million. However, costs were also up, rising 6.7%, to USD3,220 million.

Passenger numbers for the period were stable, handling 10.6 million passengers. Load factors were meanwhile up 4.3 ppts, to 80.1%. However, passenger yield (per RPM) was down 0.2%.

Chairman, Jeff Smisek, stated he was disappointed at the results, which were "impacted by the weak economy and the challenges we experienced with weather related closures of our Newark Liberty hub". However, he added the improvement in revenue reflects the improving global economy and benefits received from its membership in the Star Alliance.

US Airways discontinues merger talks with United Airlines

US Airways (-4.3%) took the day's biggest fall after it announced during trading that it has discontinued recent discussions with United Airlines' parent, UAL Corporation, regarding a potential merger between the two companies. Chairman and CEO, Doug Parker, stated that after an extensive review and careful consideration, the carrier's Board of Directors decided to discontinue discussions. Mr Parker added "It remains our belief that consolidation makes sense in an industry as fragmented as ours. Whether we participate or not, consolidation that leads to a more efficient industry better able to withstand economic volatility, global competition and the cyclical nature of our industry is a positive outcome". United Airlines (+1.1%) ended trading up.

Southwest Airlines slips

Meanwhile, Southwest Airlines (-1.0%) slipped despite reporting a net profit of USD11 million for 1Q2010, compared to a loss of USD91 million in the corresponding period last year.

See related report: Southwest profitable in 1Q2010, sees improving revenue performance; Virgin .America posts loss in 2009.

Elsewhere, American Airlines (-2.5%) was also down on news UBS lowered its price target for the carrier from USD14 to USD12. The analysts stated American's "argument that industry labour costs will eventually rise to AMR's level is not a strong argument for its stock". Expressjet (+3.1%) and Republic Airways (+2.9%) meanwhile gained.

Also featured in today's America Airline Daily:

  • Alaska Airlines and Horizon Air announce service fee changes;
  • Delta and AirTran CEOs push for increased regulation of energy market trading;
  • Frontier Airlines improves inflight customer experience;
  • US DoT denies tarmac delay exemption requests;
  • Volar shareholders seeking to sell shareholdings: reports;
  • Air Jamaica employees demand answers on merger plan.

North & South America selected airlines daily share price movements (% change): 22-Apr-2010

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