United Airlines up on ‘Buy’ rating; Alaska Air reports improved loads; AirTran passenger numbers up

North and South American carriers’ stock surged on Wednesday (02-Jun-2010) on improved traffic results from Continental Airlines (+12.6%) the day before and a boost in the wider market.

JP Morgan analyst, Jamie Baker, told Reuters Continental’s traffic report is expected to “kick off a multi-week, across-the-board strengthening of consensus, the magnitude of which is unlikely to go ignored by equities, in our view”.

The AMEX Airline Index (+6.0%) was boosted as a result. The Dow (+2.3%) ended the session higher on gains in the energy sector and news pending home sales in the US were higher than expected in Apr-2010.

Meryll Lynch reinstates coverage of United Airlines

United Airlines (+12.6%) made the biggest gain of the day, after Merrill Lynch reinstated coverage of the carrier during trading with a "buy" rating. The company stated there is good momentum at the carrier, whether or not it merges with Continental Airlines, as a “rising business mix, better reliability and redeployment of aircraft” is increasing its RASM and margins. Merrill Lynch expects the carrier to generate approximately USD1.5 billion p/a of free cash flow over the next few years.

Alaska Air reports improved load factor

Alaska Airlines Group (+8.1%) gained after Alaska Airlines reported a 4.6 ppt year-on-year rise in load factor for May-2010, to 81.4%. The improvement was the result of a 10.7% rise in traffic (RPMs), on a 4.5% increase in capacity. Passenger numbers also rose, up 5.3% for the month, to 1.4 million.

Horizon Air also reported an improve load factor for the month, up 1.4 ppts, to 73.1%, despite a 0.1% decline in passenger numbers, to 554,000.

The carrier hit a new 52-week high of USD49.48 during trading as a result.

AirTran passenger numbers up 6.6%

AirTran Airways (+5.7%) also rose on the back of improved traffic result. Load factor for the LCC improved 2.8 ppts for May-2010, to 80.8%. Traffic rose 8.4% on a 4.6% increase in capacity. Passenger numbers for the month were up 6.6% as a result, to 2.1 million. 

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:

  • ATA airlines reports 2% decline in pax in Apr-2010;
  • Frontier expands seat assignment programme and reduces fees;
  • Hawaiian welcomes first of new A330/A350 aircraft;
  • US Airways installs wireless internet on 51 A321s;
  • US Department of Transportation proposes additional consumer protections;
  • Air Canada's aircraft lease expiries to 2013.

North & South America selected airlines daily share price movements (% change): 02-Jun-2010