TAM joins Star Alliance; LAN load factor down; Copa not looking for cross-border merger
North and South American carriers shares slipped with the wider market on Thursday (13-May-2010), with the Dow (-1.1%) ending the session lower on warnings from Cisco Systems and Kohl's Corp that the economy is still weak. Stocks were also hampered by a probe into whether banks misled customers about their involvement in mortgage bond deals.
- North and South American carriers' shares slipped due to weak economic indicators and concerns about European debt issues.
- TAM Airlines formally joined the Star Alliance, expanding its intercontinental network.
- Brazil's domestic air traffic increased by 23.5% in April 2010, with TAM and GOL reporting improvements.
- LAN Airlines experienced a decline in load factor due to the lingering effects of the Chilean earthquake.
- Copa Airlines plans to grow through route expansion rather than cross-border mergers.
- Other news in the aviation industry includes aircraft deliveries, lobbying efforts, merger reviews, and potential strikes.
In South American markets, Brazil's Bovespa (-0.7%) was down on a decline in homebuilders, despite strong gains in the index the day prior on reports of a rise in retail sales. Chile's IPSA (-0.5%) index was also lower on continued concerns regarding European debt issues and a decline in the US market.
TAM joins Star Alliance
TAM Airlines (-0.2%) slipped only slightly after news it formally joined the Star Alliance during trading. TAM offers more than 40 destinations in Brazil and 10 airports across South America. Over the past years, the airline has expanded its intercontinental network to cover a variety of destinations in the US and Europe, many of them Star Alliance hubs.Tthe Star Alliance network now counts 27 member carriers offering more than 21,050 daily flights to 1,167 destinations in 181 countries. TAM's inclusion completes a process that began in 2006 with the first informal negotiations.
Also during the week, Brazil's National Civil Aviation Agency reported a 23.5% year-on-year rise in domestic traffic (RPKs) in the country for Apr-2010. TAM reported a 5.7% improvement in traffic, while GOL's (-0.2%) traffic was up 29.6%.
International traffic was, meanwhile, down 0.2% for the month, with TAM reporting a 1.2% decline. However, GOL's international traffic was up 5.6% for the period.
LAN load factor down 5.0 ppts for Apr-2010
LAN Airlines (-0.9%) was also down with the wider market. During the week, the carrier reported a 5.0 ppts year-on-year decline in load factor for Apr-2010, to 71.6%. The decline was led by a 7.7% drop in international load factor, to 70.3%. Conversely, domestic load factor rose 1.0%, to 74.6%.
The carrier attributed the decline to the continued affect of the earthquake in Chile in Feb-2010, stating the earthquake is continuing to affect demand, particularly on regional and North American routes. However, passenger numbers were still up for the month, gaining 6.9%, to 1.3 million.
Copa not looking for cross-border merger
Copa (-2.2%) took the biggest fall of the South American carriers for the session. Earlier in the week, CEO, Pedro Heilbron, stated the carrier will grow through expanding its route network and increased frequencies on existing routes rather than through a cross-border merger. The carrier, which has quadrupled its fleet to 56 aircraft since 1998 and operates to 45 destinations in 24 countries, has identified 30 further destinations for possible expansion, including up to four new destinations through 2010 and into late 2011. Copa Airlines placed orders for 15 B737-800 aircraft last year and is targeting a fleet of 72 aircraft by 2012.
America Airline Daily is your one-stop shop for news, data and analysis from the dynamic North American, Caribbean and Latin American aviation markets. Other stories featured in today's issue include:
- Frontier takes delivery of seventh A320;
- Southwest spent USD180,000 in 1Q2010 to lobby Government;
- Justice Department to take its time reviewing United/Continental merger;
- FAA proposes USD325,000 penalty against Continental;
- Jazz pilots to vote on strike on contract demands;
- Caribbean Airlines faces competition on Air Jamaica routes.
North & South America selected airlines daily share price movements (% change): 13-May-2010
Source: Centre for Asia Pacific Aviation & Yahoo! Finance