Delta RASM up 23% for Jun-2010; US Airways 'cautiously optimistic' for 2010
- Delta Air Lines reports significant increase in revenue and positive outlook for 2Q2010.
- Analysts maintain a "buy" rating for Delta's common shares and upgrade the rating of its shares based on improved economic conditions.
- US Airways expresses cautious optimism for 2010 and observes a recovery in business demand.
- Continental Airlines expects substantial synergies from its proposed merger with United Airlines.
- Allegiant and JetBlue experience a decline in their share prices.
- Overall, North and South American carriers' stocks rise due to positive market outlook and optimistic industry sentiment.
Delta Air Lines RASM up 23% for Jun-2010
Delta Air Lines (+2.2%) reported Jun-2010 revenue per available seat mile (RASM) increased 23% year on year, with 2Q2010 RASM up 20% year-on-year. Revenue increased 63% year-on-year in May-2010, while ticket volumes were up 35%. Corporate bookings also increased 35%.
The carrier has projected a 2Q2010 EBITDAR of EUR1.4 billion and an operating margin of 10-11% for the quarter. Domestic capacity is projected to be flat, while international capacity is expected to be reduced 1%. Unit costs excluding fuel are projected to increase 1%.
See related report: Delta Air Lines targeting 10% return on invested capital
Also during trading, Jesup & Lamont analyst, Helane Becker, reiterated the company's "buy" rating of Delta's common shares, with a price target of USD20, or 10 times estimated 2010 earnings per share (EPS) of USD1.99, which is an increase from its prior estimate of USD1.93. Ms Becker also increased the company's 2Q2010 EPS estimate from USD0.57 to USD0.62 and are using a 10.6% operating margin. Zacks meanwhile upgraded its rating of Delta's shares from "neutral" to "outperform", based on improved economic conditions and revenue trends.
US Airways 'cautiously optimistic' for 2010
US Airways (+8.3%) was boosted by comments from President, Scott Kirby, who stated the carrier's outlook for 2010 is "characterised by cautious optimism". He added that the industry "appears to be turning a corner", with the carrier seeing a "dramatic" recovery in business demand.
See related report: US Airways President Scott Kirby cautiously optimistic: It's different this time
Continental expects USD1bn in synergies from United merger
Continental Airlines (+4.0%), meanwhile, stated it expects USD1.0-1.2 billion p/a in synergies from its proposed merger with United Airlines (+3.6%), including revenue synergies of USD0.8-0.9 billion and net cost synergies of USD0.2-0.3 billion. 75% of synergies are expected to be achieved in the second year, with full run-rate expected in year three. The carrier also expects the combined network will add more than 2 million passengers p/a.
See related CAPA Profile: Mergers and Consolidation
Elsewhere, Allegiant (-2.5%) and JetBlue (-0.5%) were the only carriers to fall for the day.
North & South America selected airlines daily share price movements (% change): 15-Jun-2010
Source: Centre for Asia Pacific Aviation & Yahoo! Finance