Southwest slips despite ‘buy’ rating; GOL, LAN Airlines, TAM down with market


Southwest Airlines (-1.1%) slipped on Friday (22-Oct-2010) despite Hudson Securities analyst Daniel McKenzie maintaining a "buy" rating and USD17 price target for the carrier during trading. The comments came after Southwest reported a net profit of USD205 million or USD0.27 per share for 3Q2010, compared with a loss of USD16 million or USD0.02 per share in the previous corresponding period.

Mr McKenzie stated he now expects the LCC to report earnings per share (EPS) of USD0.18-0.16 for 4Q2010 and EPS of USD1.10 for FY2011, which includes “roughly” USD0.10 from its pending acquisition of AirTran. 

AirTran misses analyst expectations

AirTran (+0.1%) made a marginal gain for the day, despite reporting a net profit of USD36.3 million or USD0.22 per diluted share for the three months ended 30-Sep-2010, compared with a net profit of USD10.4 million or USD0.08 per diluted share in the previous corresponding period. The result was on the back of a 11.8% year-on-year rise in revenue to USD667.9 million.

However, adjusted profit came in at USD0.12 per share due to a gain related to future fuel-related derivative assets. Analysts had expected the carrier to report a profit of USD0.17 per share, according to Thomson Reuters.

GOL, LAN Airlines, TAM down

Elsewhere, Latin American carriers including GOL (-1.1%), LAN Airlines (-0.9%) and TAM (-0.6%) were all down at the end of trading, as wider markets declined. Markets were down as investors expressed uncertainty ahead of the G-20 meeting. As a result, Brazil’s Bovespa (-0.2%) slipped for the day, while Chile’s IPSA (+0.1%) made a marginal gain. Copa Airlines (+1.3%) was the only carrier from the region to rise for the session.

Over the weekend, TAM announced it has signed a proposed codeshare agreement with Japan’s ANA to connect Tokyo and Sao Paulo via London. Under the agreement, TAM will place its JJ flight code on ANA services between Tokyo Narita and London Heathrow. ANA will place its NH flight code on TAM services between Heathrow and Sao Paulo Guarulhos.

North & South America selected airlines daily share price movements (% change): 22-Oct-2010

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