British Airways and American Airlines to launch trans-Atlantic JV in Oct-2010; Finnair flat


European airline shares made gains on Wednesday (08-Sep-2010) after wider markets reached a four-month closing high. Markets gained on news Portugal successfully completed its debt auction during the day.

  • European airline shares made gains on the back of positive market performance and Portugal's successful debt auction.
  • British Airways and American Airlines are set to launch a trans-Atlantic joint venture in October 2010, with Iberia also joining after its merger with BA.
  • Cimber Sterling experienced a significant increase in yields, while Norwegian saw a decline in yields and RASK.
  • Finnair reported a decline in load factor and passenger numbers, particularly in trans-Atlantic traffic, but saw a significant increase in cargo tonnes.
  • Eurofly and Aer Lingus saw gains in their share prices, while Thomas Cook Group and Turkish Airlines experienced declines.
  • Overall, the European airline market showed mixed performance with some carriers benefiting from positive developments while others faced challenges.

In key markets, UK's FTSE (+0.4%), Germany's DAX (+0.8%) and France's CAC (+0.9%) all ended trading higher.

British Airways, American Airlines to launch trans-Atlantic JV in Oct-2010

British Airways (+0.3%) made a slight gain after its V-P Americas, Simon Talling-Smith, stated the carrier's trans-Atlantic JV with American Airlines will be launched in Oct-2010, with the carriers to align their FFPs, commence joint marketing to corporate clients in early 2011 and implement schedule changes from Apr-2011.

Iberia (+1.5%) will also be part of the JV when it completes its merger with BA, with Iberia expected to contribute 10% to the venture's estimated USD7 billion in annual revenue, according to Mr Talling-Smith.

See related CAPA Profile: Mergers and Consolidation

Cimber Sterling yields up; Norwegian yields down

Cimber Sterling (+8.0%) was the biggest gainer for the day, after a day earlier reporting an 11% yield increase in Jul-2010 to EUR 11.28 cents, with a 5% RASK increase to EUR 8.46 cents. The carrier commented that the yield increase was achieved through "much better pricing" than in Jul-2009, adding that the figure "clearly shows that the summer of last year was a start-up phase, primarily for leisure traffic, for which pricing was not optimal".

Norwegian (-2.8%) suffered the biggest decline of the day, after estimating a 13% decline in RASK for Aug-2010 and a 10% decline in yield.

Finnair loads and passenger numbers down

Finnair was flat, after reporting a day earlier a 1.8 ppt decline in load factor for Aug-2010 to 78.6%. Load factor was down across the carrier's regions, expect for in Asia, where load factor rose a marginal 0.2 ppts.

Passenger numbers were down 1.9% for the month to 644,300, led by a decline in trans-Atlantic passengers, down 27.5%. Finnair attributed the drop in trans-Atlantic numbers to a change in New York service frequency from 10 times weekly to seven times weekly.

According to the carrier, leisure traffic declined more than 9% for Aug-2010.

More positively, cargo tonnes rose 43.3% for the period, as traffic (RTKs) rose 10.5% and capacity (ATKs) was increased by 3.9%.

See related CAPA Profile: Air Freight

Elsewhere, Eurofly (+2.1%) and Aer Lingus (+1.6%) also gained for the day, while Thomas Cook Group (-2.3%) and Turkish Airlines (-0.4%) were down.

Europe selected airlines daily share price movements (% change): 08-Sep-2010

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