30-Jul-2010 3:33 PM

Industry misses revenue record in 2Q2010; Expressjet surges; Jazz Air and Air Canada down

With the mainline and low-cost carrier reporting season drawing to a close, AirlineFinancials.com Founder Bob Herbst said the nine largest carriers reported USD1.86 billion in net profits on USD31.7 billion in revenues (net profits exclude USD405 million for special items).

The 2Q2010 revenue was the second highest in history and just shy of 2008's 2Q2010 USD33.3 billion record. The 2Q2010 profits missed the decade high set in 2007 by only USD8 million. 2Q2010 revenue and profits were slightly higher than AirlineFinancials.com projected earlier in the month.

American (AMR) as projected was the only major airline to report a loss for the recent Q2. Based on net income margin performance ex-special items, Alaska (ALK) led the industry at 8.6%. The rest of the airlines were:

US Airways (LCC) 8.36%
United (UAUA) 8.33%
Continental (CAL) 6.93%
Southwest (LUV) 6.82%
Delta (DAL) 6.72%
Air Tran (AAI) 5.53%
JetBlue (JBLU) 3.19%
American (AMR) --.19%

Average Q2 margin for the industry was 5.87%

AirlineFinancials.com expects continued strong performance for the airline industry through at least the current 3rd quarter.

US mainline airline 2Q2010 financial results

Regionals kick off their reporting season next week joined by Air Canada and Embraer. Regional results should mirror their major-partner clients. ExpressJet has not announced its second quarter conference call date nor has WestJet.

See related CAPA Profile: Financial Results

Southwest Airlines reports 23.1% rise in net profit

Southwest Airlines was flat for the day, despite reporting a 23.1% year-on-year rise in net profit for the three months ended 30-Jun-2010, to USD112 million, or USD0.15 per diluted share. Excluding special items for both periods, net income was USD216 million for the period, or USD0.29 per diluted share. The result beat on-average analyst expectations of a USD0.27, according to Thomson Reuters.

Expressjet reaches agreement on ongoing auction rate securities

Elsewhere, Expressjet (+6.8%) gained after announcing it has entered into a settlement agreement in an ongoing auction rate securities (the ARS) litigation with respect to certain ARS. Among other terms, the settlement agreement provides for the repurchase of the outstanding ARS with an aggregate par value of USD1.1 million for 90% of par value. With this settlement, ExpressJet will have sold its last ARS. As part of the settlement agreement, ExpressJet will dismiss its lawsuit and will release its claims related to its purchase of this and other ARS.

Jazz Air Income Fund (-1.3%) and Air Canada (-1.3%) were meanwhile the biggest decliners of the day, despite a 0.3% rise in the Canadian TSX.

North and South American airline stocks rose marginally on Thursday (29-Jul-2010), thanks to a surge in Expressjet and Latin American carriers’ prices for the day. The gains were despite a second consecutive decline in the Dow (-0.3%) due to some disappointing financial results, and an increase in oil prices (+3.0%), to USD78.36.

North & South America selected airlines daily share price movements (% change): 29-Jul-2010