Delta reaches 52 week high; Chilean President completes sale of LAN stake

North and South American airline stocks were mixed on Thursday (25-Mar-2010), with investors showing some signs of disappointment with the results of the second stage of US-EU open skies negotiations, despite strong endorsement by sections of the industry. A flat wider market also affected airline stocks, as investors continued to be concerned with global debt levels and the less than impressive auction of US bonds.

The AMEX Airline Index (+0.3%) ended trading up marginally. 

US and EU agree to new open skies agreement

Some carriers suffered after the US and the European Union reached a preliminary agreement on the second stage of their Open Skies aviation agreement, agreeing to an expansion of the 2007 Open Skies pact to provide for greater US-EU cooperation on a wide range of aviation issues.

The new agreement affirms that the terms of the 2007 agreement will remain in place indefinitely, allowing airlines from both sides to select routes and destinations without limitations on the number of US or EU carriers that can fly between the two sides or the number of flights they can operate. The EU will submit the draft agreement for approval by the EU Transport Council in Jun-2010. Details of the second stage agreement include:

  • Adoption of 'Fly America', further opening EU carriers’ access to US Government-financed traffic.
  • EU airlines will gain new commercial opportunities to fly between the US and non-EU countries, subject to “certain changes to the legal framework for noise-based airport restrictions”;
  • A number of obstacles to EU and US investments in 3rd countries' airlines will be removed. Foreign ownership of voting stock in US carriers is currently limited to 25%. No formal timetable has been established.

Continental Airlines (+0.6%) congratulated the US Government on the agreement, stating it supports aviation liberalisation and believes close coordination and cooperation with the European Union on aviation matters is important to the US and international economies.

United Airlines (+0.3%) also applauded negotiators for concluding a "historic agreement today that will further liberalise the transatlantic market and enable airlines and their alliance partners greater commercial flexibility to better serve their customers".

See related report: Reaction to the US-EU Open Skies expansion: Warm in the US, cool elsewhere

Delta reaches 52 week high

Delta Air Lines (+2.8%) hit a 52-week high during trading of USD14.41, before ending trading at USD14.20. The high is a long way from the carrier's 52-week low of just USD5.29 per share. Delta has been gaining since the stock received upgrades from analysts earlier this week.

Chilean President completes sale of LAN stake

Chilean President, Sebastian Pinera, concluded the sale of his 26.3% stake in LAN Airlines (+1.5%) during trading, raising a total of USD1.5 billion in the past month. Portions of his stake in the carrier were sold to:

  • Celfin Capital SA: 6.4%;
  • Cueto family: 8.6%;
  • Temasek Holdings: 1.18%;
  • Bethia SA: 8%.

Also during trading, LAN signed an agreement with Boeing to adjust the delivery of ten B787-8s, accelerating delivery from 2014 to 1Q2011. These ten aircraft are part of the original order for 26 B787s placed by LAN in 2007 and previously scheduled for delivery between 2014 and 2019. In addition, LAN has outstanding orders for six leased B787s. The aircraft are part of the renewal and growth of LAN's long-haul fleet, allowing LAN Airlines and its subsidiaries to serve international destinations, improving connectivity between Latin America, Europe and the US.

Also in today’s America Airline Daily:

  • Air Transport Association urges constructive, forward-thinking FAA reauthorisation;
  • American Airlines launches nonstop service from New York to San Jose, Costa Rica;
  • Hawaiian Airlines considering expanding to new Australian destinations;
  • Jazz Dispatchers ratify labour agreement.

North & South America selected airlines daily share price movements (% change):  25-Mar-2010