US Airways and United Airlines in talks to merge

North and South American carriers’ stocks moved lower with the wider market on Wednesday (07-Mar-2010), following news US consumer credit fell by USD11.5 billion in Feb-2010. Shares were also down on continued concerns over Greece’s ability to pay off its sovereign debt. The AMEX Airline Index was down 1.66% as a result, despite a 1.1% decline in oil prices, to USD85.88.

US Airways and United Airlines in talks to merge

US Airways (-3.7%) took the session’s biggest drop. Reports emerged late in trading that US Air is in merger talks with United Airlines (-2.7%) parent, UAL Corporation. United and US Airways were previously in merger talks in 2000 and 2008, with the carriers having to withdraw on both occasions after opposition from unions. Both carriers have recently called for consolidation in the US airline industry to improve revenues and reduce costs. However, both rose in after-hours trading, with US Airways gaining 13.3% and United Airlines rising 5.5%.

See related report: US Airways, United Airlines in merger talks while the opportunity remains: third time lucky?

United reports 21.5-23.5% improvement in PRASM

Also during trading, United reported a 4.8 ppt year-on-year rise in load factor for Mar-2010, to 83.5%. The result came as traffic (RPMs) rose 3.2%, on the back of a 2.7% reduction in capacity (ASMs).  Passenger numbers meanwhile rose 1.1%, to 7.1 million.

Also for the month, consolidated passenger revenue per available seat mile (PRASM) is estimated to have increased 21.5-23.5% year-on-year. Consolidated PRASM is estimated to have increased 3.2% to 5.2% for Mar-2010 compared to Mar-2008, approximately 3.0 ppts of which was due to growth in ancillary revenues.

Delta load factor improves for Mar-2010

Delta Air Lines (-3.3%) shares also fell, as the carrier reported a 3.3 ppt improvement in load factor for Mar-2010, to 84.2%. Traffic rose 3.0% and capacity was reduced by 1.6%. Passenger numbers rose 2.3% for the month, to 14.1 million.

Southwest passenger numbers rise marginally

Southwest Airlines (-1.1%) also reported an improvement in load factor for Mar-2010, up 3.7 ppts, to 81.0%, as traffic rose 0.4% on a 4.2% reduction in capacity. Passenger numbers were not quite as strong, with the LCC reporting a 0.4% rise in passengers carried, to 7.7 million. The carrier meanwhile estimated passenger revenue per ASM to have increased in the 22% year-on-year range.

Republic gains

Elsewhere, Republic Airways (+6.8%) shares lifted, ahead of its announcement of the branding for its combined Frontier and Midwest airlines on 13-Apr-2010. The day prior, the carrier reported a 59% year-on-year increase in passenger numbers in Mar-2010, to 2.7 million. Load factor was also up 7.0 ppts, to 80%.

GOL (+2.1%) and Allegiant (+1.4%) also rose.

Also featured in today’s America Airline Daily:

  • Allegiant to launch a number of new services;
  • Southwest Airlines announces Double Credit Days;
  • Canadian Government restores carry-on bag allowance for U.S.-bound flights;
  • American Airlines to conduct 'Eco-Friendly' test on trans-Atlantic service;
  • Air Jamaica takeover pushed back.

North & South America selected airlines daily share price movements (% change): 07-Apr-2010