JetBlue PRASM up 10%; Justice Department urged to scrutinise Southwest/AirTran merger deal


North and South American airline stocks slumped on Monday (11-Oct-2010) as the Dow closed trading flat after the lightest day of trading so far this year. Airline shares were down as investors remain uncertain ahead the latest round of quarterly results.

  • North and South American airline stocks slumped as investors remained uncertain ahead of quarterly results.
  • JetBlue reported a 10% improvement in passenger revenue per ASM (PRASM) for September 2010.
  • American Airlines' stock declined ahead of reporting its 3Q2010 results, with analysts expecting improved results.
  • US Representative Jim Oberstar urged the Justice Department to subject the Southwest/AirTran merger to rigorous scrutiny.
  • ExpressJet was the only airline that did not end the day with a lower stock price.
  • COPA reported a decline in load factor for September 2010.

However, oil prices slipped 0.5% for the session, to USD82.21.

JetBlue PRASM up 10%

JetBlue (-3.7%) was one of the biggest decliners of the day, despite the carrier reporting a 10% year-on-year improvement in passenger revenue per ASM (PRASM) for Sep-2010.

See related CAPA Profile: Yields

Load factor for the month also improved, up 3.0 ppts, to 80.6%. The rise was the result of a 14.6% lift in traffic (RPMs), on the back of a 10.4% increase in capacity (ASMs). Revenue passenger numbers were meanwhile up 15.3% for the period, to 1.9 million.

American Airlines to report latest quarterly results next week

American Airlines (-2.2%) was also down for the day, ahead of reporting its 3Q2010 results on 20-Oct-2010. According to NewsyStocks.com, analysts on average expect the carrier to report earnings per share (EPS) of USD0.35 on USD5.8 billion in revenue. The carrier reported a loss of USD0.93 on USD5.1 billion in revenue in 3Q2009. It also reported a loss of USD0.03 per share in 2Q2010. However, analysts expect improved results for 3Q2010, due to improving passenger traffic and the commencement of its trans-Atlantic JV with British Airways and Iberia.

See related CAPA Profile: Financial Results

Oberstar urges Justice Department to subject Southwest/AirTran merger to 'rigourous scrutiny'

Southwest (-1.4%) fell, while AirTran (-0.3%) slipped slightly after US Representative Jim Oberstar, Chairman of the House Transportation and Infrastructure Committee, reportedly asked the Justice Department over the weekend to "subject the proposal by Southwest Airlines to acquire AirTran Airways to the most rigorous scrutiny". Mr Oberstar went on to state he believes that with the Southwest-AirTran deal "the US airline industry will be continuing down the path of consolidation, which, I strongly believe, will lead to less service, higher prices, and fewer choices for consumers".

Elsewhere, ExpressJet (+0.2%) was the only carrier to not end the day lower, while COPA (-4.3%) declined after reporting a 4.9 ppt fall in load factor for Sep-2010, to 70.5%, the day prior.

North & South America selected airlines daily share price movements (% change): 11-Oct-2010

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