US Airways and Continental down, US airlines report another month of revenue decline

Mixed results for North and South American carriers on Friday (18-Dec-2009) pushed the AMEX Airline Index into negative territory, down 0.4% at the end of trading. The fall was the result of another gain in oil prices, up 1.4% to USD72.99. The wider market meanwhile gained slightly, with the Dow up 0.2%.

ATA reports 13th consecutive monthly fall in US carrier passenger revenue

The Air Transport Association of America (ATA) reported a 7% year-on-year fall in passenger revenue in Nov-2009, based on a sample group of carriers. This marks the 13th consecutive month in which passenger revenue has declined from the prior year, fueled primarily by the 12th consecutive month of ticket price declines.

Approximately 1% fewer passengers travelled on US carriers during the month, while the average price to fly one mile fell 6.4%. Passenger revenue fell most sharply in trans-Atlantic and trans-Pacific markets.

ATA President and CEO, James C. May stated “while it's good to see the number of passengers beginning to stabilise after several months of pronounced declines, revenue remains depressed. Hopefully this is an indication that a gradual recovery is under way".

Meanwhile, domestic yields appear to be improving according to ATA, falling 4.6% year-on-year in Nov-2009, compared to a 12.5% drop in Oct-2009. Analysts at JP Morgan stated the improvement in domestic yields indicates a small recovery in Business travel demand. The analysts added that while domestic routes typically recover more quickly, international recovery is likely to overtake domestic recovery sometime in 1H2010.

Trans-Atlantic, Latin America and trans-Pacific yields also improved compared to Oct-2009, down 8.2%, 11.5% and 14.9%, respectively. See related report: Marked improvement in US domestic yields in November reflects improving economy

US Airways removed from CreditWatch

US Airways (-2.0%) stocks were down despite Standard & Poor's lifting the carrier’s corporate credit rating from CreditWatch, as the ratings agency expects the carrier to make a recovery in 2010, citing improved revenue results and "reduced capital needs for aircraft". The carrier has been on CreditWatch since Jul-2009. 

Continental Airlines expecting 81.5% load factor for 4Q2009

Continental Airlines (-2.1%) was downgraded from ‘Buy’ to Hold’ during trading by Stifel Nicolaus, after the carrier made some small changes to its 4Q2009 guidance. Jesup & Lamont meanwhile maintained its ‘Buy’ rating for the carrier.

Continental now expects a load factor of 81.5% for the quarter, while capacity (ASMs) is estimated to be down by 0.5% versus a prior estimate of a decline of 1%.

Meanwhile, ExpressJet (+7.2%) and WestJet (+5.4%) made the greatest gains on Friday, while GOL fell 4.4%

North & South America selected airlines daily share price movements (% change): 18-Dec-09