FedEx and UPS lead the US carriers higher; Republic Airways down

The majority of North and South American carrier stocks rose on Friday (11-Sep-09), assisted by the sharp fall in oil prices (-3.7%), to USD69.29. As a result, the AMEX Airline Index rose slightly (+0.2%), while the wider market slipped, with the Dow down 0.2% at the end of trading.

The bellwether tolls

The rise was led by freight carrier FedEx (+6.4%), following its announcement early in the day that it expects its 1Q2009-10 (three months ending 31-Aug-09) profit to exceed earlier forecasts, expecting to now report earnings of USD0.58 a share. FedEx had earlier forecast earnings of USD0.30 to USD0.45 a share. The carrier also expects to report earnings of USD0.65 to USD0.95 a share in 2Q2009-10.

FedEx attributed the increase to tight cost control and improved international demand. FedEx has cut both jobs and salaries, amid the global financial downturn. The carrier concluded the improving international demand meant it is starting to see signs of a recovery. FedEx added however, that it was unsure how long it would take until demand fully recovered. The forecast of a recovery in freight consequently lifted UPS (+4.4%).

Delta and American fight it out over JAL

Delta Air Lines (-0.5%) and American Airlines (+0.2%) are in talks with Japan Airlines (JAL) to purchase a stake in the Japanese carrier. Delta has reportedly expressed interest in investing up to JPY50 billion (USD550 million) in JAL, giving the US carrier a stake of up to 11.2% in the Japanese airline. Meanwhile, American Airlines stated it is also negotiating a possible investment in JAL, as part of a push to establish a “far reaching” and comprehensive immunised trans-Pacific JV agreement. See separate report: Delta Air Lines' Japanese and Asian Dilemma

Expressjet and Republic slip

Expressjet (-2.4%) stocks fell the most by the end of trading, despite SmarTrend adjusting its rating of the stock to “buy” on the day. The analysts stated Expressjet’s stocks have returned 44.2% since 21-Aug-09.

Republic Airways (-2.0%) was also down, despite the Bankruptcy Court last week approving Frontier Airlines’ Chapter 11 exit plan. Republic will acquire the carrier on 01-Oct-09. 

North & South America selected airlines daily share price movements (% change): 11-Sep-09