20-Apr-2010 5:05 PM

Southwest soars to 52-week high; Delta losing USD10.4 million per day from Ash Attack

Analysis

The majority of North and South American carriers’ stocks fell on Monday (19-Apr-2010), as the Ash Attack in Europe continues to affect a number of carriers’ operations. The falls came despite gains in the wider market, with the Dow (+0.7%) up on strong financial results from Citigroup.

Southwest soars to 52-week high

Domestic-focused Southwest (+2.8%) was one of the few carriers to gain on Monday, reaching a 52 week high after JP Morgan raised its price target for the LCC from USD12 to USD17 and rating from ‘Underweight’ to ‘Overweight’. The analysts attributed the increase to their belief Southwest is successfully taking unit revenue from competitors, thanks in part to its no baggage fee policy. Southwest is to report its 1Q2010 financial results on 22-Apr-2010. On average, analysts expect the carrier to report an earnings per share (EPS) profit of USD0.03, compared to a loss of USD0.03 per share in 1Q2009.

JP Morgan also raised ratings for the following carriers:

AirTran (+1.8%): raises price target from USD9 to USD9.50, rating ‘Overweight’;
Alaska Air (-2.8%): raises price target from USD34 to USD36, cuts rating from ‘Neutral’ to ‘Underweight’;
Continental Airlines (-4.4%): raises price target from USD18 to USD26.50, rating ‘Neutral’;
Delta Air Lines (-5.0%): raises price target from USD14 to USD18.50, from ‘Neutral’ to ‘Overweight’;
JetBlue (+1.1%): raises price target from USD6.50 to USD7, rating ‘Neutral’;
United Airlines (-5.1%): raises price target from USD22 to USD32, rating ‘Overweight’;
US Airways (-3.6%): raises price target from USD9 to USD11, rating ‘Overweight’.

Expressjet names new CEO

ExpressJet Airlines (+1.6%) was also up, after announcing it has appointed Thomas M Hanley as President and CEO, taking over from Patrick Kelly, effective immediately. Mr Hanley’s previous experience includes various executive positions for a private equity fund, Wexford Capital.

US carriers losing USD35.8 million per day in revenue from Ash Attack

Also during trading, AirlineFinancials.com airline analyst and founder, Robert Herbst, estimated the five US carriers which operate services to Europe have been losing approximately USD35.8 million per day since the start of the European shut down on 16-Apr-2010 . Daily revenue loss estimates per carrier are as follows:

Delta Air Lines: USD10.4 million revenue loss, with operating loss of USD6.5 million;
United Airlines: USD8.4 million revenue loss, with operating loss of USD5.2 million;
American Airlines: USD7.6 million revenue loss, with an operating loss of USD4.6 million;
Continental Airlines: USD5.6 million revenue loss, with an operating loss of USD3.4 million;
US Airways: USD3.7 million revenue loss, with an operating loss of USD2.2 million.

United, Delta, Continental, American and US Airways were all down as a result.

Elsewhere Air Canada (+5.0%) made the day’s biggest gain, despite analysts at Citigroup Investment Research estimating the carrier is losing USD10 million per day in revenue from the closure of the European airspace.

Also featured in today’s America Airline Daily:

Frontier Airlines begins service to five new destinations;
JetBlue completes top international safety audit;
United Airlines and Continental Airlines to share financial information;
Porter Aviation Holdings files preliminary prospectus for proposed IPO launch.

North & South America selected airlines daily share price movements (% change): 19-Apr-2010

Southwest soars to 52-week high; Delta losing USD10.4 million per day from Ash Attack