Southwest and JetBlue unit revenues and share price slips; GOL also feeling the pressure on yields


The majority of US LCC share prices slipped yesterday, in line with broader reductions in the market, with AirTran leading the way, falling 5.3%. Southwest and JetBlue also slipped, down 1.8% and 1.0%, respectively, while Allegiant gained 0.8% on news of yet another strong month and quarter for traffic.

Allegiant's scheduled passenger numbers jumped 32.2% year-on-year in Jun-2009 to just shy of half a million, with load factor slipping 2.5 ppts to a still industry-leading 91.5%. In contrast, Southwest reported a 6.4% year-on-year reduction in revenue passengers, while load factors remained on the lower end of the spectrum, but gained 1.3 ppts to 79.5%.

However, of key concern for Southwest investors was a reduction in passenger revenue per ASM in the range of 9-10%. JetBlue reported a reduction in unit revenues for the month of 12% year-on-year. The carrier also reported a small (0.6%) increase in passenger numbers and a 2.8 ppt load factor reduction to 80.3%, while AirTran reported a 5.4% improvement in passenger numbers, with a 1.1 ppts load factor reduction to 83.6%,.

WestJet shares also gained yesterday, up 2.5%. The carrier stated it anticipates 2Q2009 unit revenue (RASM) to be in line with original expectations of a reduction of 16-18%.

Across the Atlantic, easyJet shares slipped 0.1%, while Ryanair gained 1.5% and Air Berlin shares were up 1.2%, as the carrier reported an impressive increase in unit revenue (RASM) of 14% year-on-year. Passenger numbers were down 4.9%, in part due to a target capacity reduction of 2.7%, while load factor slipped 1.8 ppts.

In the Asia Pacific region, AirAsia's shares gained 3.6%, on news that the carrier is considering selling the entirety of its new share issue (up to 20% of expanded equity) to a single institutional fund or strategic investor. According to CEO, Tony Fernandes, the strategic investor may be a private equity firm or tourism industry business, with the sale to be completed by early Aug-2009.

Selected LCCs daily share price movements (% change): 07-Jul-09

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