Airlines Weekly Notes: Shaky Sentiment Amid Weak Macro Picture, Labor Disputes

Last week started out horribly for US airlines as stocks dropped over 10% as bankruptcy concerns for American Airlines (NYSE:AMR) weighed on sentiment. However, the release of September traffic results helped confidence recover later in the week as system-wide capacity cuts led to higher load factors. Below, we take a look at the past week’s noticeable developments at Delta Air Lines (NYSE:DAL), United Continental (NYSE:UAL), Southwest Airlines (NYSE:LUV), American Airlines (NYSE:AMR), US Airways (NYSE:LCC) and Alaska Airlines (NYSE:ALK).

Delta Airlines

As per traffic results for September 2011, Delta’s system load factor was 83.6 percent, 1.1 points higher than the prior year, on a 2.2 percent decrease in capacity. System traffic decreased 0.9 percent year over year. Domestic traffic increased 0.5 percent year over year on a 3.3 percent decrease in capacity. Domestic load factor increased 3.2 points to 83.0 percent. International traffic decreased 2.8 percent year over year on a 0.6 percent decrease in capacity, and load factor decreased 2.0 points to 84.5 percent. (See Delta Press Release, Oct 5)

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American Airlines

American Airlines reported a September load factor of 81.4 percent, an increase of 1.3 points versus the same period last year. Traffic increased 1.9 percent on a capacity increase of 0.3 percent year-over-year. Domestic traffic increased 1.7 percent year-over-year on 1.1 percent less capacity, resulting in an increase in domestic load factor of 2.3 points versus September of last year. (See American Airlines Press Release, Oct 5)

In another major development last week, the stock lost over 30% of its value at the start of the week as higher than normal pilot retirements renewed bankruptcy concerns for the airline. However, the stock bounced back 21% the next day as the carrier resumed previously stalled contract negotiations with the pilots. (See American’s Stock Hits Turbulence on Pilot Retirement, Bankruptcy Concerns)

See our full analysis of American Airlines

United Continental

United Continental Holdings reported September 2011 operational results for United Air Lines, Inc. and Continental Airlines, Inc. United and Continental’s combined consolidated traffic (revenue passenger miles) in September 2011 decreased 1.7 percent versus pro forma September 2010 results on a combined consolidated capacity (available seat miles) decrease of 1.0 percent. The carriers’ combined consolidated load factor in September 2011 decreased 0.5 points compared to the pro forma results from the same period last year. (See United Continental Press Release, Oct 7)

See our full analysis of UAL

Southwest Airlines

Southwest Airlines Co. reported September 2011 combined traffic results for Southwest Airlines and AirTran. The Company flew 7.9 billion revenue passenger miles (RPMs) in September 2011, compared to 7.5 billion combined RPMs flown in September 2010, an increase of 6.4 percent. Available seat miles (ASMs) increased 3.2 percent to 10.2 billion from the September 2010 combined level of 9.9 billion. The load factor for September 2011 was 77.8 percent, compared to the combined load factor of 75.5 percent in September 2010. (See Southwest Press Release, Oct 7)

See our full analysis of Southwest

US Airways

US Airways Group announced September, quarter and year-to-date 2011 traffic results. Mainline revenue passenger miles (RPMs) for the month were 4.9 billion, down 0.9 percent versus September 2010. Mainline capacity was 5.8 billion available seat miles (ASMs), down 2.7 percent versus September 2010. Mainline passenger load factor was a record 83.6 percent for the month of September, up 1.5 points versus September 2010. (See US Airways Press Release, Oct 5)

See our full analysis of US Airways

Alaska Airlines

Alaska Air Group reported September operational results for its subsidiaries, Alaska Airlines and Horizon Air, and on a combined basis. Alaska reported a 10.4 percent increase in traffic on a 7.2 percent increase in capacity compared to September 2010. This resulted in a 2.4-point increase in load factor to a September record of 83.9 percent. (See Alaska Airlines Press Release, Oct 5)

See our full analysis for Alaska

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