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Indian airline shares bounce back, Chinese carriers watch fuel, ANA traffic surges

Analysis

Lower oil prices and a stronger Indian stock prices have renewed some investor confidence in Indian airline stocks. Spicejet shares gained 7.9%, the largest single day gain for a week, while Kingfisher Airlines shares rose 4.9% and Jet Airways shares were up 3.8%.

Summary
  • Lower oil prices and stronger Indian stock prices boost investor confidence in Indian airline stocks.
  • Spicejet shares gain 7.9%, Kingfisher Airlines shares rise 4.9%, and Jet Airways shares are up 3.8%.
  • Boeing to commence deliveries of B787s to All Nippon Airways in 3Q2011.
  • ANA Group reports positive international traffic growth in Jan-2011.
  • Chinese airlines, China Eastern and Air China, expect fuel costs to impact profitability but remain optimistic.
  • EVA Air reports a decline in sales revenue for Feb-2011, while China Airlines reports a decline in sales revenue for the same period.

Boeing confirmed that it would commence deliveries of B787s to All Nippon Airways Co in 3Q2011, in-line with the updated B787 production schedule. ANA Group reported the following international traffic highlights in Jan-2011:

  • International:
    • Passenger numbers: 434,346, +21.6% year-on-year;
    • North America: 88,394, +21.9%;
    • Europe: 36,442, -1.6%;
    • Asia/Oceania: 309,510, +24.9%;
  • Passenger load factor: 69.4%;

China Eastern Airlines deputy GM Li Jun stated the uptrend in fuel costs will "definitely weigh" on the carrier's costs, although the airline still expects to be profitable. Air China's chairman Kong Dong has acknowledged high oil prices will have an effect on the carrier's bottom line, but stated he remains optimistic about the carrier's profitability in 2011. The chairman said "things will be under control as long as the travel flow keeps coming".

EVA Air reported a 1.9% year-on-year decline in sales revenue* to USD242.6 million in Feb-2011. For the first two months of 2011, the carrier's sales revenue increased 6.1% to USD536.1 million. Major Taiwanese competitor, China Airlines reported a 7.5% year-on-year decline in sales revenue to USD313.5 million in Feb-2011. For the first two months of 2011, the carrier's sales revenue increased 1.3% to USD688.8 million.

* Based on the conversion rate USD1 = TWD29.42

Selected APAD daily share price movements (% change): 08-Mar-2011

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