Airline Stocks Rise for Ninth Day, Longest Streak Since 1995
Airline stocks rallied for a ninth day, the longest streak since 1995, following forecasts from JPMorgan Chase & Co. and Delta Air Lines Inc. that the economic rebound will boost travel spending.
The AMEX Airline Index jumped 3.8 percent to 28.63 in New York, bringing its climb since Sept. 2 to 26 percent. The measure, which includes companies from Alaska Air Group Inc. to AMR Corp., has soared 125 percent since reaching a low on March 9.
JPMorgan analysts upgraded UAL Corp. and US Airways Group Inc. in a Sept. 10 report that said the industry’s revenue in the last two months has beaten estimates. Delta, the world’s largest carrier, increased its profit margin estimate yesterday as customers scooped up lowered fares for summer vacations.
Economic reports from U.S. retail sales to manufacturing in China have signaled that the global recession is easing. The Dow Jones Transportation Average climbed 0.3 percent today, extending an eight-day advance that has lifted the measure by 11 percent, according to data compiled by Bloomberg.
“You’d be hard pressed to find anything more levered to an economic recovery than airlines,” said Blaze Tankersley, chief market strategist at Bay Crest Partners LLC in New York. “Business is resuming to a normalized state and that’s going to help airlines. We’re seeing the return of leisure and business travel.”
‘Buy’ Call
Bay Crest recommended investors buy stocks in the industry in an Aug. 27 note. The airline index has jumped 16 percent since then.
UAL, owner of United Airlines, has risen 55 percent since Sept. 2 for the biggest gain in the measure. JPMorgan boosted the Chicago-based carrier to “overweight” from “underweight.”
Delta is up 25 percent since Sept. 10, when the Atlanta- based company said it will have a positive operating margin of as much as 4 percent for the current quarter, higher than previously forecast.
FedEx Corp. has climbed 16 percent in the past eight days. The second-largest U.S. package-shipping company reported first- quarter profit on Sept. 11 that topped its forecast, a sign that shipping demand is starting to pick up.
Iraq Domestic Airlines, Baghdad Gets First Flight from Western Europe in 17 years
In case you missed this story from earlier this week, the BBC writes “the first commercial flight between Western Europe and Baghdad in at least 17 years has landed in Iraq.” That flight -– operated by Sweden’s Nordic Leisure -– arrived in Baghdad last Friday carrying about 150 passengers. Most of the passengers were Iraqis, according to the BBC. The news agency adds “air services to Iraq are gradually increasing after UN sanctions were imposed following the 1990 invasion of Kuwait.”
Still, the BBC notes some carriers — such as Turkish Airlines –- had already begun flying to Baghdad as early as October. Despite that, flights to Baghdad have remained largely off-limits to most Western European carriers. But, the BBC notes “while few direct flights between Europe and Baghdad are available, a number of airlines have been running services for some time to the northern Iraqi cities of Sulaimaniya and Irbil.” One such carrier is Austrian Airlines, which began Vienna-Irbil service in February.
And the ramp-up of commercial service raises another issue for Iraq. The Tacoma News-Tribune writes that “Iraq officially began to govern its skies last week, but it has enough trained air traffic controllers to manage only the highest heights above the country. That leaves the U.S. still in control of everything below 24,000 feet, meaning that American air traffic controllers handle everything from the runway to 23,999 feet. U.S. and Iraqi officials say that they’re hopeful that Iraq will say goodbye to all its American air traffic advisers by 2011 — the year designated in the security agreement for the total withdrawal of U.S. forces from Iraq — as Iraq’s airline industry grows for the first time in decades.”
Global Airline Industry Expectations in 2010 : Aviation Firms Shares Rose Sharply
Airline stocks have been flying high in 2010 thanks to renewed hopes over an economic recovery, an uptick in business travel, and a stronger dollar. The Claymore/NYSE Arca Airline ETF (FAA) has shot higher on the news, gaining nearly 5% on the week and 15% so far on the year. A slight pullback in oil prices–one of the primary negative factors weighing on the airline industry–has also added momentum to FAA in recent sessions. Ongoing concerns over the financial health of Europe have boosted the greenback, which generally moves in the opposite direction of oil.
Alliance consolidation should also further help to boost revenues, as the world’s biggest airline, Delta Air Lines, looks for a new partner to assist in the expansion of international travel destinations. Not to be outdone, several of Delta’s chief rivals are also looking to strengthen international operations. “American Airlines, British Airways, and Iberia have taken significant steps toward allaying antitrust regulators’ concerns over their proposed alliance, offering a number of gates at New York’s John F. Kennedy Airport and London’s Heathrow and Gatwick airports to competitors,” writes Christopher Hinton. These developments could help many airlines open up more international routes, which could translate into increased profits. For many carriers, business and international are the most profitable operations.
Wall Street banks are beginning to take note of the improved outlook for the industry. UBS recently raised its target price on several carriers and Jesup & Lamont Securities forecast a smaller first-quarter loss for Delta. In further good news for Delta, the company raised its operating profit margin forecast for this quarter from 1% to 2% of sales, up from an estimate at the end of January of “break-even.” However, the best sign for investors in Delta was the large uptick in business travelers; ticket volume was up 34% in February compared to last year, producing a 32% rise in corporate travel revenue according to Barron’s.
Airlines Flight Service, Emirates Airline additional flights for Hajj
In a move aimed at facilitating travel for thousands of pilgrims, Dubai-based Emirates Airline has announced the addition of extra flights to Jeddah for the forthcoming Hajj pilgrimage.
Emirates will operate 31 additional flights to Jeddah, the closest airport base to the Holy City of Mecca, to cater for the increased passenger movement during this peak season and has appointed a dedicated group of airport staff to provide the best ground-handling services to passengers, while onboard they can interact with Arabic speaking cabin crew.
Adnan Kazim, Senior Vice President, Commercial Sales for Emirates Airline, said:
‘Emirates aims to provide all its customers with the very best service and convenience, particularly so at this significant time of year, when many Muslims want to make this important journey.’
Competitive economy class and first class fares are applicable on a number of flights. These fares do not carry restrictions on refund or rebooking and reconfirmations are no longer required.
Providing further dedicated assistance to pilgrims for the organisation of their travel requirements, the airline’s 24-hour hotline number 800-8-971-487 will operate round the clock, offering customers direct access to a travel consultant at any time of the day.
The toll free hotline facility, manned in Arabic and English, will be equipped with additional manpower over and above the existing team of highly-trained travel consultants and will aid customers to book and alter their flight schedules as required.
Places on all flights are subject to availability, so early booking is advised. For more details on fares and availability, customers should contact their Hajj tour operator.
Southwest Airlines Celebrates 15 Years of Service in Tucson, Boise, and Salt Lake City
Southwest Airlines is celebrating 15 years of LUV in three cities today. On Oct. 4, 1994, the airline began service to Tucson International Airport, Salt Lake City International Airport, and Boise Airport. In celebration of this special occasion, Southwest Airlines’ Employees and Customers will enjoy food and FUN at each of these airports.
BOISE (BOI) statistics:
- Southwest began service to Boise with seven daily nonstop departures to three cities: Salt Lake City, Seattle/Tacoma, and Portland.
- Boise was the 41st city added in the Southwest system.
- Southwest Airlines now operates 16 daily nonstop departures to seven cities out of BOI.
SALT LAKE CITY (SLC) statistics:
- Southwest began service to Salt Lake City with 41 daily nonstop departures to 13 cities: Boise, Las Vegas, Los Angeles (LAX), Oakland, Orange County, Phoenix, Portland, Reno/Tahoe, Sacramento, St. Louis, San Diego, Seattle/Tacoma, and Spokane.
- Salt Lake City was the 42nd city added in the Southwest system.
- Southwest Airlines now operates 43 daily nonstop departures to 14 cities out of SLC.
TUCSON (TUS) statistics:
- Southwest began service to Tucson with eight daily nonstop departures to three cities: Las Vegas, Los Angeles (LAX), and San Diego.
- Tucson was the 43rd city added in the Southwest system.
- Southwest Airlines now operates 18 daily nonstop departures to six cities out of TUS.
After 38 years of service, Southwest Airlines, the nation’s leading low-fare carrier, continues to stand above other airlines–offering a reliable product with exemplary Customer Service. At Southwest Airlines, bags fly free. Customers can check their first two bags at no extra charge (size and weight limits apply). Southwest offers Customers a comfortable traveling experience with all premium leather seats and plenty of legroom. Southwest Airlines (NYSE: LUV), the nation’s largest carrier in terms of domestic passengers enplaned, currently serves 67 cities (adding Milwaukee Nov. 1, 2009) in 34 states. Based in Dallas, Southwest currently operates more than 3,200 flights a day and has nearly 35,000 Employees systemwide.
