Loading

TAM hoping to strengthen presence in Asia; LAN to expand fleet; reports improved net profit

Analysis

The majority of North and South American carriers shares were up again on Thursday (29-Apr-2010), boosted by another day of gains in the wider market. The Dow (+1.1%) rose on improved 1Q2010 earnings results from a number of companies and reports Greece is close to a bailout deal.

The AMEX Airline Index (+1.5%) moved higher as a result. The gain was despite a 0.9% increase in oil prices, to USD83.22.

TAM hoping to strengthen presence in Asia

Both TAM (+3.9%) and GOL (+3.7%) gained on Thursday, pushed higher by a 2.0% rise in the Brazilian Bovespa index.

TAM this week announced plans to open a representation office in Tokyo on 27-Apr-2010, as part of plans to strengthen its presence in the Asian market. The airline will work through a GSA. The carrier already has representative offices in Asia in South Korea, Hong Kong, Thailand and Taiwan, with plans to establish a representative in India in May-2010.

LAN planning to expand fleet; reports improved net profit for 1Q2010

LAN Airlines (+2.4%) was also up after announcing plans during trading to invest USD2.8 billion to increase its fleet up to 2013. The carrier has a USD5.9 billion investment plan for until 2018, which includes increasing its fleet from 96 aircraft in 2009, to 176 in 2018. Under the plan, LAN plans to purchase 26 B787-800 Dreamliner aircraft and lease a further six. The carrier plans to take delivery of two B787-8s in 2011, three in 2012 and five in 2013. The aircraft will be based in Santiago and operate US and Europe routes.

Also this week, LAN reported a 35.8% year-on-year rise in net profit for the three months ended 31-Mar-2010, to USD88.3 million. Operating profit also rose, up 21.0%, to USD142.9 million, as a 17.3% rise in operating revenue outweighed the 16.7% rise in operating costs, to USD1,035 million and USD892.0 million, respectively.

LAN stated it lost USD2.6 million on hedging in 1Q2010, compared with a USD57.9 million loss in 1Q2009, with the carrier adding that it also witnessed a strong recovery in passenger and cargo business in the quarter.

In terms of traffic for the quarter, the carrier reported a 7.9% improvement in passenger numbers, to 4.1 million. Load factor rose 1.4 ppts, to 79.3%. As a result, passenger yield rose 6.6% for the period, to USD 9.1 cents.

Considering current market conditions, the carrier stated it maintains its expectations for 2010 with passenger ASK growth of approximately 10% in 2010. Growth in the passenger business during 2010 is expected to mainly be driven by international and regional markets.

LAN Cargo currently expects approximately 16%-18% growth in cargo capacity for 2010, mainly driven by higher utilisation of the freighter fleet, especially the two B777-200 freighters received in the first half of 2009.

Elsewhere, Copa Holdings (+0.9%) stock also rose.

Also featured in today's issue of America Airline Daily:

North & South America selected airlines daily share price movements (% change): 29-Apr-2010

Want More Analysis Like This?

CAPA Membership provides access to all news and analysis on the site, along with access to many areas of our comprehensive databases and toolsets.
Find Out More