08-Jul-2010 4:29 PM

Southwest, Allegiant and GOL report unit revenue improvements in Jun-2010

US airline stocks surged yesterday, reflecting wider market reports and positive Jun-2010 traffic reports showing strong load factors, improved passenger demand and careful capacity management, which has had a positive effect on yields.

The NYSE Arca Airline Index gained nearly 6% on the day, while the Dow Jones Industrial Average added 2.8% – representing the largest daily gain since 27-May-2010 – to reach its best close since 28-Jun-2010.

Shares in Southwest Airlines gained 6.2% yesterday, after reporting an estimated 24% increase in PRASM in Jun-2010. Also in the month, revenue passengers increased 3.3% in the month to 7.9 million, with an average load factor of 81.9% (+2.4 ppts year-on-year).

Allegiant shares also gained strongly yesterday, increasing 5.7%, with the carrier estimating that scheduled RASM increased between 14.7% and 15.25% in Jun-2010, while scheduled total revenue per ASM (TRASM) is estimated to have increased in the 13.75% to 15.2% range. The carrier estimates 2Q2010 RASM increased between 9.25% to 9.65% with a TRASM increase of 7.5-7.95%. Also in the month, the LCC reported a 3.5% increase in passenger numbers to 553,780 with an average load factor of 89.9% (+1.0 ppts).

In Brazil, GOL (shares up 3.5%) commented that yield in the month increased by approximately 5% to BRL 20.00 cents (USD 11.25 cents), in line with expectations. In the month, load factors decreased by 1.0 ppts year-on-year, but increased 3.5 ppts over May-2010 levels.

Selected LCCs daily share price movements (% change): 07-Jul-2010