Lufthansa up on analyst comments; Finnair trying to block airBaltic from Finncomm sale

European airline shares advanced for another day on Tuesday (03-Aug-2010) despite wider markets reporting mixed results, as Barclays Capital initiated coverage on some carriers. Wider markets leaned lower on disappointing US home sale and factory data and financial results.

Furthermore, the gain in airline shares was despite news from IATA that European airline shares rose barely 1% year-on-year during Jun-2010 and Jul-2010.

In key markets, UK’s FTSE was flat, Germany’s DAX (+0.3%) rose and France’s CAC (-0.1%) slipped.

Lufthansa up on analyst comments

Lufthansa (+3.6%) rose following positive comments from Citi analyst, Andrew Light. Mr Light stated the group is now more “comfortable” with the group’s restructuring efforts, particularly with subsidiary carriers, and the group’s revenue outlook, following the release of its 1H2010 results. The group reported a net loss of EUR104 million for the six months, compared with a loss of EUR178 million in the previous corresponding period.

Finnair trying to block airBaltic from Finncomm sale

Also during trading, Finnair (+0.2%) estimated that an end to cooperation with privately owned domestic carrier Finncomm would cost it USD26 million. Finnair is attempting to block AirBaltic's purchase of Finncomm by asking a court to enforce a previous agreement that Finnair says gives it the right of first refusal on ownership in Finncomm.

See related CAPA Profile: Privatisation and Ownership

Air France-KLM (+1.0%) was also up. Barclays Capital rated the carrier’s shares as ‘Overweight’. British Airways (+2.2%) was also rated at ‘Overweight’. SAS (+3.7%) was the biggest performer of the day.

easyJet mandates debt finance arrangers

Elsewhere, easyJet (-4.5%) was one of the day’s biggest decliners, after Barclays Capital initiated coverage of the carrier with an ‘Underweight’ rating. During trading, the LCC mandated Crédit Agricole CIB and KfW IPEX-Bank as joint underwriters and lead arrangers for a USD215 million, 10-year commercial debt financing of eight A319 and A320 aircraft, scheduled for delivery between Aug-2010 and May-2011. The carrier stated the agreement represents one of the largest single airline commercial debt financings arranged in the aviation bank market in 2010.

See related CAPA Profile: Fleets

Elsewhere, Cimber Sterling (-1.5%) and El Al (-4.4%) were also down.

Europe selected airlines daily share price movements (% change): 03-Aug-2010