Loading

Shares fall as oil prices firm. LAN and Copa report strong April traffic

Analysis

US airline stocks have eased as oil prices firmed in early trading this week. WTI finished trading on Monday at USD102.55 per barrel for June delivery, after slipping below USD100 per barrel late last week, prompting a rally in airline shares.

Summary
  • US airline stocks have eased as oil prices firmed, leading to a decline in share prices for US Airways, Delta, American Airlines, and Allegiant.
  • Latin American carriers, LAN Airlines and Copa Airlines, reported strong traffic growth in April 2011 due to the late Easter holiday period and overall recovery in passenger traffic.
  • LAN Airlines saw a significant increase in passenger numbers, with domestic traffic up 40.9% and international traffic up 28% year-on-year.
  • Copa Holdings reported a 27.2% increase in revenue passenger miles (RPMs), driven by a surge in international RPKs.
  • Despite the overall decline in airline stocks, Copa shares only traded down 0.1%, while LAN Airlines was the only positive performer, gaining 0.5%.
  • Oil prices and capacity expansion remain key factors influencing the performance of airline stocks in the market.

US Airways led the falls, down 3.8%, while Delta, American Airlines and Allegiant all lost more than 3%. Latin American carriers did not escape unharmed, with GOL down 2.7%.

Also in Latin America, LAN Airlines and Copa Airlines have reported exceptionally strong Apr-2011 traffic, thanks to the late Easter holiday period, as well as the general recovery in passenger traffic. At the same time, both carriers are continuing to strongly increase capacity.

LAN Airlines reported passenger numbers rose 36.4% year-on-year to 1.7 million. Domestic passenger traffic was up 40.9% to 1.2 million passengers, on a 25.5% lift in overall domestic revenue passenger kilometers (RPKs) and a 24.3% increase in capacity. International passenger numbers rose 28% to 559,000, with RPKs up 29.2% and capacity up 16.6%.

Copa Holdings reported a 27.2% increase in revenue passenger miles (RPMs), with international RPKs surging 30.2% and domestic RPMS up 2.2%. Capacity rose 23.9% across the carrier's markets, up 27.4% in international markets but down 2.1% domestically.

See related report: Copa expects no slowdown in expansion or profitability

Copa shares traded down just 0.1%, while LAN was the day's only positive performer, gaining 0.5%

Selected AAD daily share price movements (% change): 10-May-2011

Want More Analysis Like This?

CAPA Membership provides access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find Out More