US airline yield gains easing, but performance still encouraging

Southwest Airlines and United Continental have commenced the October traffic reporting period on a solid note, showing healthy increases in passenger revenue per ASM.

Southwest Airlines flew 6.9 billion revenue passenger miles (RPMs) in Oct-2010, an 8.3% increase, while available seat miles (ASMs) increased 5.0% to 8.4 billion. Load factor gained 2.5 ppts to 81.7%, while passenger revenue per ASM is estimated to have increased approximately 11% for the second consecutive month – building on a small increases in September and October last year.

Southwest Airlines’ monthly PRASM growth (% change year-on-year): Jan-2009 to Oct-2010

United Continental Holdings meanwhile reported consolidated traffic (revenue passenger miles) in Oct-2010 increased 5.9% year-on-year on a consolidated capacity increase of 5.0%. The carriers' combined consolidated load factor increased 0.7 points compared to the same period last year.

United's consolidated RASM increased an estimated 13.0 to 14.0% year-on-year, while Continental's October consolidated RASM increased 15.5 to 16.5%. (From Dec-2010, United Continental will report RASM estimates on a combined basis).

United/Continental monthly PRASM growth (% change year-on-year): Jan-2009 to Oct-2010

The figures did not set the markets alight – United Continental shares closed flat on Friday, while Southwest eased 0.4%. But American Airlines’ shares took off ahead of its traffic report, surging 6.4% on Friday.

North & South America selected airlines daily share price movements (% change): 05-Nov-2010