Continental Airlines loses USD25 million from snow storm; LAN decline slows after Chile earthquake

North and South American carriers’ stocks went against wider markets on Tuesday (02-Mar-2010), falling lower after Continental Airlines (-3.3%) stated constant snow storms have cost the carrier USD25 million in lost revenue. The AMEX Airline Index fell 1.2% as a result.

The fall in airline stocks was despite another drop in oil prices (-1.2%), to USD78.70, and news international passenger demand (RPKs) to/from North America rose 2.1% year-on-year in Jan-2010, according to IATA. Latin American carriers meanwhile saw demand increase by 11% in January on the back of a strong regional economy. See related article: Two paced aviation recovery: Emerging markets streaking ahead

Meanwhile, the Dow was flat, despite news of mergers and acquisitions in some sectors and the possibility of improved earnings for banks.

Continental Airlines loses USD25 million from snow storm delays and cancellations

Continental Airlines (-3.3%) declined on news of its USD25 million loss in revenue from constant snowstorms across the winter period, which forced it to close its hub at Newark Liberty Airport on 10-Feb-2010 and 26-Feb-2010. See related article: USD150 million impact on US airlines from winter storms

In more positive news for the carrier, it reported its first month of positive yield growth since Dec-2008 the day prior. For Feb-2010, consolidated passenger revenue per available seat mile (RASM) is estimated to have increased between 7.5-8.5% year-on-year, while mainline RASM is estimated to have increased between 5.5-6.5%. Standard & Poor's Equity Research upgraded the carrier’s rating from ‘Buy’ to ‘Strong Buy’, due to the improved revenue trends.

Consolidated load factor for the month rose 5.5 ppts, to 77.7%, on the back of a 3.3% increase in traffic (RPMs) rose 3.3%, as capacity (ASMs) was reduced 3.8%. See related article: Continental Airlines’ yields and traffic levels improve in Feb-2010, aiming to “make money” in 2010

LAN decline slows

LAN's (-0.5%) stock decline was smaller on Tuesday, after falling 1.8% the day prior following the Chilean earthquake on Saturday. LAN resumed approximately 15% of operations to Santiago Airport yesterday and hopes to resume normal operations by Friday (05-Mar-2010).

Competitor, TAM (+1.4%) was one of the few carriers to gain, while WestJet (+3.4%) was also up, as Canada’s TSX (+0.9%) closed higher. Air Canada was flat.

Other news featured in today’s America Airline Daily includes:

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