US LCC stocks all rose yesterday suggesting investors are not too concerned about the implications for the sector of another union of legacy carriers. If higher fares and fewer seats flow from the United-Continental merger (which they should if it is to be a success), this could play into the hands of the expansion-hungry and volume-driven LCC segment.
See related reports:
- United-Continental: is bigger better, or does it just take longer to burn?
- United-Continental’s USD3 billion deal to yield USD1.2 billion in value - conservatively
None of the LCCs have yet expressed concerns publicly about the United-Continental merger. Southwest spokeswoman Olga Romero told the Phoenix Business Journal, “at this time it’s too early to know what this means for [Southwest], but [it] could potentially be a good thing”. She added, “as things develop, we’ll stay poised to take advantage of opportunities as we always do, and we’ll continue to monitor the airline industry in the US to see what else might occur beyond this merger".
Southwest gained 1.7% yesterday, while AirTran, JetBlue and Allegiant rose 3.4%, 2.0% and 1.2%, respectively.
North & South America selected airlines daily share price movements (% change): 03-May-2010
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