24-Feb-2010 4:56 PM

United Airlines and US Airways open to mergers; Expressjet reports net profit

North and South American shares declined with the wider market on Tuesday (-3.6%), with the Dow (-1.0%) sliding after The Conference Board's Consumer Confidence Index declined sharply in Feb-2010 to 46.0, down from 56.5 in Jan-2010.

Consumers' short-term outlook, which had been improving, lost considerable ground in Feb-2010. Also pushing stock lower was an unexpected fall in housing prices in Dec-2009. Another gain in oil prices (+1.6%), to USD79.05, also pushed stocks lower. Consequently, the AMEX Airline Index (-0.9%) ended trading down.

Expressjet reports net profit but says there’s still a long way to go

Expressjet (-3.4%) was one of the day’s biggest decliners, as the carrier reported an operating loss of USD17.1 million for the quarter, compared to a loss of USD8.7 million in the previous corresponding period. Expressjet indicated it has a long way to go to achieve profitability from operations.

For FY2009, the carrier reported a net loss of USD3.3 million, compared to a loss of USD95.1 million in the previous corresponding period, while operating losses amounted to USD47.2 million, compared to a loss of USD116.5 million in the previous corresponding period. See related article: ExpressJet achieves 4Q2009 profit, but not from operations

United Airlines and US Airways reportedly open to merger negotiations

United Airlines (+0.3%) and US Airways (+1.0%) were two of the only three carriers to see an improvement in stock prices on Tuesday, after both carriers indicated they were willing to merge with other carriers. According to a Reuters report, United Airlines CFO, Kathryn Mikells, stated the carrier is open to merging with US or foreign carriers, but is currently pursuing additional alliances in the meantime. Meanwhile, US Airways CFO, Derek Kerr, stated the carrier is open to the possibility of a merger, but only with another US carrier.

President elect in talks to sell further 12% stake in LAN

Chile’s President-Elect, Sebastian Pinera, is reportedly in talks to sell a 12% stake in LAN Airlines (-1.0%) to a local investment group following the sale of an 8.6% stake in the carrier on 23-Feb-2010. TAM (-3.6%) slipped again on the news.

ATA reports increase in passenger revenue

Air Transport Association of America (ATA) reported passenger revenue increased 1.4% year-on-year in Jan-2010 - the first monthly positive growth following 14 consecutive monthly declines, led by passenger revenue growth on trans-Atlantic services (+3.4%). According to ATA, passenger numbers transported by its member airlines fell 0.4% in Jan-2010.

Orbitz Worldwide CEO, Barney Harford, stated average Business fares rose approximately 4% in Jan-2010 and have climbed 6% so far in Feb-2010.

Meanwhile, United Airlines CFO, Kathryn Mikells, stated Business demand is recovering, but will not reach pre-global financial downturn levels in 2010. According to Mikells, carriers are soon to raise Business fares, as a result of capacity cuts across the industry in 2008 and 2009.

For more on all that’s happening in the American airline industry, why not subscribe to America Airline Daily? Other stories featured in today’s issue include:

Allegiant Air announces new, non-stop air service between Fort Wayne and Myrtle beach;
American Airlines to outsource its services at Chicago O'Hare International Airport;
ILFC announces proposed USD750 million senior secured term loan;
Emirates sees proposed services worth CAD480 million for Canada.

North & South America selected airlines daily share price movements (% change): 23-Feb-2010