United plunges 21.5%, drags AMEX Airline Index down; Continental releases Sep-2009 traffic


The AMEX Airline Index slumped 8.3% on Thursday (01-Oct-09), as United Airlines' stock collapsed by 21.5%. Stocks were affected by a weak reading on US manufacturing, stoking fears the market may have risen too far too fast. The Dow (-2.1%) ending trading down heavily.

Jesup & Lamont release 3Q2009 Earning Preview

Analysts Jesup & Lamont released its 3Q2009 Earning Preview for US carriers during trading. The analysts stated they believe the carriers have seen the market bottom out, and the outlook for 3Q2009 is for an aggregate total of about USD30 billion in revenue, an operating profit of approximately USD600 million and a net loss of about USD400 million. (All numbers exclude non-recurring charges/gains and out of period mark-to-market hedge gains/losses).

The analysts also estimate revenues will be down by approximately 8% year-on-year for the quarter, while 4Q2009 revenues are expected to be down 8% to 10%. Jesup & Lamont also estimated 1Q2010 revenue to be down 1% to 5%, while 2Q2010 revenues will be flat and 2H2010 revenues will start to move into positive territory.

The analysts have buy recommendations on AirTran (-7.5% yesterday), Alaska Airlines (-4.9%), Continental Airlines (-8.3%), Delta Air Lines (-9.2%), Hawaiian Airlines (-5.8%) and US Airways (-9.4%), while Southwest (-6.4%) is currently rated as sell.

In related news, analysts at Stifel, Nicolaus & Co stated they remain cautious of the airline industry’s revenue for the remainder of 2009 and into 2010. The analysts stated “we believe investors might be anticipating a V-shaped recovery in airline pricing even with an underlying U-shaped economic recovery. We aren't saying this can't happen, we're just saying it has never happened, so those who anticipate such a scenario are effectively saying 'this time is different.'"

Continental releases Sep-2009 traffic results

Continental Airlines (-8.3%) announced its Sep-2009 traffic results after trading, reporting a 6.3% year-on-year increase in passenger traffic, to 4.7 million. Traffic (RPMs) rose 7%, while capacity was reduced by 5%, leading to a 5 ppts increase in load factor for the month, to 81.5%, led by a 7 ppts increase in trans-Atlantic load factor. 

Meanwhile, the carrier estimated RASM to have decreased 18.5% and 19.5% year-on-year for Sep-2009. For Aug-2009, consolidated passenger RASM decreased 17.2%.

North & South America selected airlines daily share price movements (% change): 01-Oct-09

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