04-Feb-2010 5:30 PM

American Airlines and US Airways report weak traffic; TAM frequent flyer IPO raises funds

Analysis

The majority of North and South American carriers were down at the end of trading on Wednesday (03-Feb-2010), dragged lower by the wider market. The Dow (-0.3%) fell on weaker than expected service sector activity. A rise in oil prices (+0.3%), to USD76.98, also affected shares.

American Airlines reports disappointing traffic

American Airlines (-3.4%) reported a 2.4 ppt year-on-year increase in load factor in Jan-2010, to 76.2%, supported by a 4.7 ppt increase in international load factor, to 77.2%. Domestic load factor meanwhile gained 0.9 ppts for the month, to 75.5%. The improvement in loads came as traffic (RPKs) rose only 0.4% year-on-year, on a 2.7% reduction in capacity (ASMs). Passenger numbers were stable, at 6.7 million.

The small gain in traffic is of concern considering the US was in the worst stages of the global financial crisis at the start of 2009.

US Airways RASM improving

Continuing the less than impressive traffic results, US Airways (-5%) reported a 0.6 ppt year-on-year decline in load factor for Jan-2010, to 74.4%, as traffic fell 1.3% and capacity was reduced only 0.6%. Passenger numbers also fell, down 3.8%, to 4.4 million.

The carrier estimated a 2.0% increase in passenger revenue per ASM (RASM) for the month, while total RASM was up approximately 3.0% off last year's very weak base.

WestJet reports sixth consecutive record January load factors

WestJet (+0.4%) meanwhile was one of the few carriers to see stock gains on Monday, after it reported a sixth consecutive year of record January load factors in Jan-2010, with load factors gaining 2.0 ppts to 78.8% in Jan-2010.

TAM frequent flyer programme raises USD392.6 million in IPO

TAM (-2.5%) shares dropped, despite news during trading that its frequent flyer programme, Multiplus SA, raised USD392.6 million by selling 45.24 million shares in an IPO on 03-Feb-2010. Multiplus plans to commence trading on 05-Feb-2010.

IATA states American carriers witnessing improving results

IATA released its Airlines Financial Monitor for Dec-2009 and Jan-2010 during trading. According to the report, 11 North American carriers reported a combined net profit of USD41.5 million in 4Q2009, compared to a loss of USD352.2 million in 4Q2008, indicating an improvement in performance, as the economy improves. The one Latin American carrier to report so far also indicated improvements.

In terms of traffic, North American carriers reported an average load factor of 79.6%, as traffic (RPKs) were reduced 5.6% and capacity was reduced 5.4%. Results had improved in 4Q2009, with carriers on average reporting load factors of 82.2%, as traffic fell 0.4% and capacity was reduced 5.4%.

In Latin America, 2009 load factors averaged 73.0%, as traffic fell 0.3% and capacity was reduced 1.7%. For 4Q2009, load factors again improved, sitting at 76.0%, as traffic grew 7.6% and capacity was increased 1.4%.

North & South America selected airlines daily share price movements (% change): 03-Feb-2010