SpiceJet and China Eastern swing to profitability, Jet Airways' woes continue

Asian airline shares were generally higher on Monday (27-Jun-09), reflecting stronger conditions on Asian equity markets. The Chinese carriers were the strongest gainers yesterday, with China Southern, China Eastern, Hainan Airlines, Air China and Cathay Pacific rising 8.0%, 7.3%, 6.7%, 5.0%, 3.0% and 1.5%, respectively, as the Shanghai stock market gained 1.86% to a 14-month closing high.

China Eastern Air Holding, parent of China Eastern Airlines, meanwhile stated it swung to a profit in 1H2009, on improved domestic travel demand and as the company cut costs by 12% (or USD16.5 million). The carrier expects to return to the black in 2009.

In the Indian market, Jet Airways shares gained 0.1% yesterday, but declined the most in more than a month during the day in Mumbai trading (by as much as 9.6%), after posting a USD47 million loss in the three months ended Jun-2009. The carrier continues to lose market share, with domestic passenger numbers down 17.8% in Jun-2009 (total pax down 11.1%), with cargo volume slumping 11.3%.

Also in the Indian market, SpiceJet's shares gained 1.3%, after the carrier returned to profitability in the three months ended Jun-2009, with a USD5.5 million profit (compared to a USD26.8 million loss in the previous corresponding period), in what CEO, Sanjay Aggarwal, described as an “amazing result” in the current environment. Revenue increased 31.2% in the period. Kingfisher's shares gained 1.6% yesterday.

Leading the decliners on Monday was AirArabia, which slipped 3.9%, the largest reduction since 13-Jul-09, with Emaar Financial Services stating the reduction is a result of a “knock-on effect” after Ryanair reported lower-than-expected financial results. AirArabia is scheduled to release its financial results early next month.

Asia Pacific selected airlines daily share price movements (% change): 27-Jul-09