Shares receive boost

US airlines have reported better-than-expected traffic figures for November, giving most company shares a much-needed boost, but there remain concerns over yields in the face of price slashing to draw passengers back.

While most airlines announced a fall in loads for the traditionally busy holiday month of November compared with the same month last year, financial analysts were encouraged by a slow pick-up in traffic since October. The results produced a rally in airline stock values led by American Airlines and Air Tran, which were up 4.3% and 3% respectively.

Analysts, however, said that this has come after airlines have cut capacity by an average of 20% following the 11 September attacks. There is also concern about airlines' ability to fill aircraft with full-price passengers. Low-cost operator Southwest Airlines was among the better performing carriers, with revenue passenger kilometres (RPKs) sliding by only 1.2%. Standard & Poors analyst Philip Baggaley commented: "It is a very fragile and incomplete recovery. Traffic, particularly leisure traffic, has recovered faster than expected." While cheaper airfares have lured back many holidaymakers, high-yield business traffic is in decline, especially on international routes.

America West was the only carrier among the top 10 largest US airlines to report a slight increase in load factor for November, but at the same time suffered nearly an 18% fall in RPKs over November last year. America West, along with financially troubled US Airways, were the only two US airlines that saw share values slump further in the wake of last month's traffic results.

Source: Flight International