Stocks rise to 15-month highs; Air Berlin’s rating raised on improved outlook

World stocks (the MSCI's all-country world stock index) and European shares (the FTSEurofirst 300 .FTEU3 index) both rose to 15-month highs on the first day of 2010 trading, up 1.5% and 1.4%, respectively.

Both stock indexes reached levels not seen since Oct-2008, just after the Lehman Brothers collapse, which marked the onset of the global economic crisis.

In Japan, the Nikkei Stock Average closed at a 15-month closing high on Monday (shares in Skymark Airlines up by 5.6%). 

Air Berlin’s rating raised on improved outlook;

Air Berlin’s shares gained 5.6%, after Deutsche Bank raised its rating on the LCC from ‘hold’ to ‘buy’, noting that the airline has been efficiently restructured over the past year, has renewed its branding, reduced costs and substantially lowed its debt levels.

The broker advised clients that it expects to see growth in passenger traffic from 2Q2010 given the global economic recovery and the airline's focus on profitable routes. Deutsche Bank also noted that the carrier is well positioned among corporate customers, unlike the majority of its LCC competitors. 

Further expansion for easyJet

easyJet’s shares gained 2.0%, on news that the carrier plans to launch a further 21 new services in 2010, increasing the number of routes to be launched across its European network in 2010 to 70. With the new services, the carrier will operate over 500 routes in 2010.

Ryanair in dispute over charges practices

Also in the UK, Ryanair rose 6.5% yesterday, even as it became involved in a row with Britain's Office of Fair Trading regarding its implementation of charges and its payments system. 

The OFT described Ryanair’s charging practices as “puerile”, adding that the carrier is operating within “the narrow letter of the law”. Ryanair denied the criticisms, describing the accusations as "disappointing and wrong".  

Allegiant to purchase 18 MD-80s from SAS

In the US, Allegiant’s shares gained 1.9%, as the company announced the signature of an agreement to purchase 18 MD-80 aircraft from Scandinavian Airlines System (SAS), with the LCC expecting to take delivery of the aircraft in the first three quarters of 2010.

Allegiant will pay for the aircraft with cash and stated that, once the transaction is complete, “we do not expect to need further aircraft purchases to fund growth currently planned through the end of 2011." 

The carrier previously stated it would “continue to evaluate the market for opportunistic purchases of high-quality MD-80 aircraft”. The LCC previously stated it can purchase and refurbish its MD-80 aircraft for as little as USD4 million.

Selected LCCs daily share price movements (% change): 04-Jan-2010