Allegiant net profit slides; Delta reports narrowed net loss; American expected to report losses

North and South American carriers’ shares were mixed on Tuesday (20-Apr-2010), despite increases in the wider market. The Dow (+0.2%) gained on strong quarterly results from various companies.

Oil prices rose 2.5% to USD83.45, sending energy stocks higher. Despite this, the AMEX Airline Index (+0.5%) ended trading up.

Allegiant net profit slides

Allegiant (-9.5%) tumbled after the company reported a 19.8% year-on-year fall in net profit for the three months ended 31-Mar-2010, to USD36.2 million. Operating profit was down 18.5%, to USD36.2 million. See related report: More profits for Allegiant, 21.4% operating margin, but investors not impressed

Delta reports narrowed net loss

Delta Air Lines (-0.2%) was also down, after the airline reported a net loss of USD256 million, or USD0.31 per share, for the three months ended 31-Mar-2010. This is compared to a net loss of USD794 million in the previous corresponding period.

Passenger revenue increased 4% year-on-year, or USD205 million, despite a 4% capacity reduction. Passenger unit revenue (PRASM) increased 8%, driven by a 5% improvement in yield, to USD 13.70 cents and a 2.4 ppts improvement in load factor, to 79.5%.

Jesup & Lamont stated it would maintain a ‘Buy’ rating for the carrier, with a price target of USD19.30, or ten times estimated Earnings Per Profit (EPS) of USD1.93. For 2Q2010, the analysts' preliminary estimate for the carrier is for EPS of USD0.49 vs a loss of USD0.24 last year (excluding non-recurring items in both years) and the current consensus estimate of USD0.65, with the difference likely in the fuel costs, which at an estimated USD2.37 per gallon are higher than initially expected.

UBS also maintained a ‘Buy’ rating on the carrier.

Analysts expecting wider losses from American Airlines

American Airlines' (+1.8%) shares were up ahead of the release of its 1Q2010 results on Wednesday (21-Apr-2010). According to Reuters, analysts expect the carrier to report a loss of USD1.31 per share, or approximately USD399.3 million, on sales of USD5.1 billion. American posted a USD375 million loss in 1Q2009.

America Airline Daily is is your one-stop shop for news, data and analysis from the dynamic North American, Caribbean and Latin American aviation markets. Other stories featured in today’s edition include:

  • AirTran pilots cast strike ballots;
  • American Airlines plans partnership agreement with JetBlue: report;
  • Continental Airlines dispatchers ratify new labour contract;
  • Spirit Airlines bookings rise by 50%;
  • US airlines employ 3.5% less full time employees in Jan-2010;
  • Porter Airlines to raise between CAD100-120m through its first IPO;
  • GOL signs agreement with GE Aviation.

North & South America selected airlines daily share price movements (% change): 20-Apr-2010