United, American Airlines, US Airways close to upgrade; Delta/US slot swap tentatively approved

All North and South American carriers' stocks were pushed higher on Monday (09-Feb-2010) following better than expected Jan-2010 traffic results from United Airlines (+17.5%) released the day prior, which led investors to believe carriers are starting to recover from the global financial downturn. The AMEX Airline Index ended trading up 7.7% as a result, despite another gain in oil prices (+2.6%), to USD73.75.

In the wider market, the Dow (+1.5%) was up, buoyed by hopes the European Union (EU) will provide some assistance to eurozone countries currently suffering from sovereign debt issues. Materials and energy stocks also pushed the market higher.

JP Morgan close to upgrading United, American and US Airways

During trading, JP Morgan issued a note stating it was close to issuing upgrades for United Airlines (+17.8%), American Airlines (+13.8%) and US Airways (+8.6%). The analysts also expect Continental Airlines (+10.4%), Delta Air Lines (+10.1%) and Alaska Air (+3.0%) stocks to continue to rally, but stated these carriers were "already reasonably valued”.

However, JP Morgan did boost United’s FY2010 EPS share estimate from USD1.23 to USD1.99, after United announced an estimated 9.5-11.5% year-on-year increase in passenger revenue per ASM (PRASM) for Jan-2010.

See related article: Have the US airlines turned the corner? Impressive PRASM performance for Southwest and United

American Airlines announced as Japan Airlines’ new partner

American Airlines (+13.8%) also gained following Japan Airlines’ announcement that it has chosen to strengthen its partnership with oneworld and American. The carriers will jointly apply to the US Department of Transportation (DOT) and the Japan Ministry of Land Infrastructure, Transport and Tourism (MLIT) for antitrust immunity (ATI) approval on transpacific routes.

Delta Air Lines (+10.1%) suffered little from the loss of JAL, with the carrier stating it remains “committed” to the Asian and Japanese services.

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Delta and US Airways slot swap tentatively approved

In other Delta news, the Department of Transportation (DoT) announced during trading it has tentatively decided to grant the waiver requested by Delta Air Lines and US Airways to allow the carriers to proceed with their proposed slot swap transaction at Reagan Washington National Airport and New York's LaGuardia Airport. The proposed waiver is contingent on the requirement that the airlines divest 20 of the 125 slot pairs involved at New York-LaGuardia and 14 of the 42 slot pairs at Washington-National. See related report: Market dominance concerns could derail Delta/US Airways slot swap deal

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GOL jumps with rising Brazilian Real

GOL’s shares jumped (+7.5%), as a rising Brazilian Real pointed to lower costs for the Brazilian LCC, with the share price gains at GOL and TAM helping boost the Bovespa Index, which rose the most since Nov-2009.

See related article: Ryanair looking to Central Europe; GOL to benefit from strengthening Brazilian Real

North & South America selected airlines daily share price movements (% change): 09-Feb-2010