Airline Finance News - North America

AirGuide Business, Feb 11, 2008

Feb 11, 2008

More carriers post strong January load factor, traffic data. Northwest Airlines said its January load factor increased from 77.9% a year ago to 79.3% last month. The airline also reported that January traffic increased 2.9% from year-ago levels. JetBlue Airways and Midwest Air Group also posted gains in January traffic. Feb 7, 2008

Airlines Rally As Oil Price Drops. Airline shares rallied Wednesday as oil prices dropped and more carriers reported traffic growth last month. The Amex Airline Index surged 5.3 percent to 38.04 in afternoon trading, erasing most of its losses earlier in the week. The Dow Jones industrial average advanced by a more modest 0.6 percent to 12,337.32. Feb 6, 2008

FAA submits decreased budget for FY09. US Dept. of Transportation submitted a $68 billion FY09 budget request to Congress including $14.6 billion to fund FAA, down from $14.9 billion enacted for FY08. The budget for the 12 months beginning Oct. 1 includes $9.67 billion for FAA's Air Traffic Organization, $2.1 billion for safety and operations, $2.75 billion for airport grants and $171 million for research, engineering and development. The agency said it plans to devote $688 million in FY09 to development of the Next-Gen satellite-based ATC system, more than triple the $212 million it plans to invest in modernizing ATC in FY08. The proposal for airport grants, known as the Airport Improvement Program, is $765 million lower than the $3.52 billion enacted for FY08. Airports Council International-North America President Greg Principato said that the "proposed cuts" mean "more congestion and delays" and increased investment in infrastructure is needed to upgrade a system "stretched to its limit." FAA is in the awkward position of waiting on reauthorization legislation; its authorization officially expired Sept. 30, 2007, and temporary authorization is set to lapse on Feb. 29. The agency submitted its FY09 budget request using terminology and calculations that assume Congress will pass reauthorization legislation, but it is possible FAA will be forced to operate under temporary authorization for a long period. Acting Administrator Bobby Sturgell said the budget submitted this week will allow FAA to hire more than 300 new air traffic controllers in FY09 and will "keep the [transition to a] Next-Gen ATC system in high gear." Feb 6, 2008

Oil futures continued their retreat amid mounting concerns over a U.S. recession. Prices came under further pressure after the government reported unexpectedly large jumps in crude oil and gasoline supplies. Light, sweet crude for March delivery fell $1.13 to $87.28 a barrel on the New York Mercantile Exchange after earlier dropping as low as $86.77, its lowest level in two weeks. Airline shares typically move opposite crude prices because fuel represents one of the industry's biggest costs. Feb 6, 2008

U.S. Domestic airlines revenue passenger miles from international flyers increased 6% during the first 10 months of 2007 versus the comparable 2006 period, per the Bureau of Transportation. Meanwhile domestic revenue grew 3.5%. Feb 6, 2008

US Airlines Top 7.4 Million Flights In 2007. Major US airlines racked up more than 7.4 million flights last year, a record high, with late arrivals also hitting their peak at 1.8 million, the US government said on Tuesday. The biggest airlines packed their schedules at major airports, squeezing in more passengers at busy times in a bid to maximize revenues from premium paying business passengers. There were more late arrivals than in any year since the US Transportation Department began keeping records in 1995, and the percent of on-time arrivals, 73.4, was the second-worst yearly performance. The worst was 72.5 percent in 2000. On-time performance was highest, over 80 percent, during the years early in the decade when airlines scaled back operations to cope with the industry's severe financial downturn. Flight delays have grown each year since 2004 when the number of flights annually topped 7 million for the first time. Atlanta Hartsfield Airport, the main hub for Delta Air Lines, was the busiest US airport for flights by major airlines with more than 827,600. Chicago O'Hare, home of United Airlines, was second at 751,500. Dallas/Ft Worth, home to American Airlines was third at just under 600,000. Feb 6, 2008

Airlines rebound on lower oil, higher traffic data. Airline stocks staged a swift turnaround in early action Tuesday as a drop in oil prices and a couple of positive traffic reports relieved early pressure from a 200-point tumble by the broader market. After slipping at the open, the Amex Airline Index bounced back with a 1.6% advance to 37.26 points. Feb 5, 2008

Air Canada

Air Canada Owner Approached On US Mergers. ACE Aviation Holdings is looking at several ways to wring the most value from its Air Canada stake, including sales to private equity players and even a linkup with a US airline, ACE's chief executive said on Friday Feb. 8. ACE CEO Robert Milton said he still prefers the original plan of distributing the 75 percent interest in Canada's dominant carrier to shareholders before winding up the holding company structure, rather than buying back the minority. But weakness in Air Canada's stock price has prompted ACE to keep all its options on the table, he said after the shrinking holding company reported a fourth quarter net income of CAD$1.13 billion (USD$1.13 billion). Milton said that he has been approached by private equity players and pension funds on ways that Air Canada could join the US airline consolidation. Feb 10, 2008