Continental Airlines reports rise in load factor; US Airways identifies potential merger partners

North and South American carriers’ stock slumped on Tuesday (01-Jun-2010), on a decline in the market, with the Dow (-1.1%) falling on concerns over slowing manufacturing activity in Europe and China. The decline in airline stocks was despite a fall in oil prices (-2.8%) to USD72.58 per barrel.

Continental Airlines reports 2.9 ppt rise in load factor

Continental Airlines (-3.8%) reported a 2.9 ppt year-on-year rise in load factor for May-2010, to 83.8%, as traffic (RPMs) gained 3.7% and capacity (ASMs) was increased 0.2%. Passenger numbers improved by 1.6% last month to 5.3 million.

Consolidated passenger revenue per available seat mile (RASM) is estimated to have increased 23-24% year-on-year, while mainline RASM is estimated to have increased between 22.5-23.5%. For Apr-2010, consolidated passenger RASM increased 14.8%, while mainline passenger RASM increased 12.6%.

See related report: Continental Airlines’ yields and load factors flying high

US Airways identifies potential merger partners

US Airways (-2.2%) President Scott Kirby stated possible merger partners for the carrier include Delta Air Lines (-0.3%), United Airlines (-3.3%) and American Airlines (-1.3%), but ruled out rumours of merging with smaller carriers due to pilot seniority issues and differences in cost structures.

Zacks maintains ‘neutral’ recommendation for Southwest

Southwest Airlines (-1.9%) was also down. Zacks Equity Research stated early in trading that it is maintaining a "neutral" recommendation of the LCC's shares. The company stated that Southwest’s strong balance sheet, low costs, revenue initiatives, network optimisation and hedging strategy make for an attractive investment opportunity but heavy discounts, labour cost concerns, fuel price volatility and technology investment by the carrier weakened its attractiveness.

Elsewhere GOL (+1.0%) was the only carrier to gain for the day, while WestJet was flat. Republic Airways (-6.8%) and Expressjet (-6.3%) were down the most at the end of the session.

America Airline Daily is your one-stop shop for news, data and analysis from the dynamic North American, Caribbean and Latin American aviation markets. Other stories featured in today’s issue include:

  • Atlantic Southeast recalls furloughed pilots for expanding fleet;
  • Passengers' deplaning rights at risk from airline retaliation;
  • JetBlue names new Vice-President Strategic Initiatives;
  • Porter defers IPO due to unfavourable market;
  • US Airways launches Canadian services.

North & South America selected airlines daily share price movements (% change): 01-Jun-2010