North and South American carriers’ stocks went against wider markets on Tuesday (02-Mar-2010), falling lower after Continental Airlines (-3.3%) stated constant snow storms have cost the carrier USD25 million in lost revenue. The AMEX Airline Index fell 1.2% as a result.
The fall in airline stocks was despite another drop in oil prices (-1.2%), to USD78.70, and news international passenger demand (RPKs) to/from North America rose 2.1% year-on-year in Jan-2010, according to IATA. Latin American carriers meanwhile saw demand increase by 11% in January on the back of a strong regional economy. See related article: Two paced aviation recovery: Emerging markets streaking ahead
Meanwhile, the Dow was flat, despite news of mergers and acquisitions in some sectors and the possibility of improved earnings for banks.
Continental Airlines loses USD25 million from snow storm delays and cancellations
Continental Airlines (-3.3%) declined on news of its USD25 million loss in revenue from constant snowstorms across the winter period, which forced it to close its hub at Newark Liberty Airport on 10-Feb-2010 and 26-Feb-2010. See related article: USD150 million impact on US airlines from winter storms
In more positive news for the carrier, it reported its first month of positive yield growth since Dec-2008 the day prior. For Feb-2010, consolidated passenger revenue per available seat mile (RASM) is estimated to have increased between 7.5-8.5% year-on-year, while mainline RASM is estimated to have increased between 5.5-6.5%. Standard & Poor's Equity Research upgraded the carrier’s rating from ‘Buy’ to ‘Strong Buy’, due to the improved revenue trends.
Consolidated load factor for the month rose 5.5 ppts, to 77.7%, on the back of a 3.3% increase in traffic (RPMs) rose 3.3%, as capacity (ASMs) was reduced 3.8%. See related article: Continental Airlines’ yields and traffic levels improve in Feb-2010, aiming to “make money” in 2010
LAN decline slows
LAN's (-0.5%) stock decline was smaller on Tuesday, after falling 1.8% the day prior following the Chilean earthquake on Saturday. LAN resumed approximately 15% of operations to Santiago Airport yesterday and hopes to resume normal operations by Friday (05-Mar-2010).
Other news featured in today’s America Airline Daily includes:
- AirTran cancels 58 services at its Atlanta hub;
- United Airlines announces schedule for first-ever service to Africa;
- United States and Israel announce agreement to enhance joint aviation security;
- Air Canada to resume its weekly Montreal-Haiti service.
North & South America selected airlines daily share price movements (% change): 02-Mar-2010