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Airline Sector Review: Post UAL-Continental and Southwest-AirTran (UAL, AMR, LUV, AAI, JBLU, LCC, DAL, SKYW, XJT, FAA)

Administrator — Fri, 01 Oct 2010 16:12:31 +0000

Today marks the game-changing merger of Continental and United and the two are one as United Continental Holdings Inc. (NYSE: UAL). America’s new #1 airline will have a long integration ahead of itself. Our readers determined after the merger was announced that this was good for investors and bad for consumers, an indication that things at the Department of Justice and/or the Federal Trade Commission are the same for rubber-stamping mergers as they have been in the last decade. What we wanted to do was review how this merger will impact the airline sector where AMR Corp. (NYSE: AMR) fends for itself, how the Southwest Airlines Co. (NYSE: LUV) and AirTran Holdings Inc. (NYSE: AAI) will play in, and how this will impact JetBlue Airways Corporation (NASDAQ: JBLU), US Airways Group, Inc. (NYSE: LCC), Delta Air Lines Inc. (NYSE: DAL), and more. There is also ExpressJet Holdings, Inc. (NYSE: XJT) merging with SkyWest, Inc. (NASDAQ: SKYW) and you can expect a consolidation of membership in carriers in the Claymore/NYSE Arca Airline (NYSE: FAA) ETF from all of these mergers.

United Continental Holdings Inc. (NYSE: UAL) will be based in Chicago rather than Houston and the combined trailing 12-month revenues from June would have been $31.4 billion. The new United and its affiliates will operate 5,800 flights a day to 371 airports, with hubs in Chicago, Cleveland, L.A., Denver, Guam, Houston, Newark, New York, San Francisco, Tokyo and Washington, D.C. The new company has approximately $9 billion of unrestricted cash and the merger is expected to deliver $1 billion to $1.2 billion of annual cost and revenue benefits by 2013. We are still awaiting a finite airplane count expectation ahead.

Southwest Airlines Co. (NYSE: LUV) announced just this week that it was acquiring AirTran Holdings Inc. (NYSE: AAI) in a move to increase it regional footprint. For Southwest to enter new markets like Atlanta, Reagan (D.C.) and Laguardia (NYC), as well as many other airports in the U.S., an acquisition was the only way to grow beyond organic expansion because capacity constraints are there as gates are just full. This is a break away from the one-plane model because of adding some smaller jets, so it will be interesting to see how this pans out in that sense. Southwest shares were at $12.28 on September 24, 2010 and now shares are trading above $13.00 versus a 52-week range of $8.10 to $14.16.

AirTran revenues and operating income, excluding special items, for the twelve months ending June 30, 2010, were $2.5 billion and $128 million, respectively. Southwest Airlines revenues and operating income, excluding special items, for the twelve months ending June 30, 2010, were $11.2 billion and $843 million, respectively. Based on current operations, the combined organization would have nearly 43,000 Employees and serve over 100 million customers annually in over 100 different airports. The combined fleet consists of 685 active aircraft: 401 Boeing 737-700s, 173 Boeing 737-300s, 25 Boeing 737-500s, and 86 Boeing 717s, with an average age of approximately 10 years.

AMR Corp. (NYSE: AMR) has still gone at it alone and has been left out of mergers. Whether this new merger closure makes the company want to look for an acquisition is an unknown, as there have been reports that it would buy where it could AND that it was going to stay focused on its own model. American Airlines, along with American Eagle and the American Connection, serves 250 cities in 40 countries with about 3,400 daily flights. The combined network fleet numbers more than 900 aircraft. At $6.23 today, AMR’s 52-week trading range is $5.11 to $10.50 and the shares were trading at $6.38 a week ago before the Southwest-AirTran deal.

Filed under: Airlines, Mergers and Buy Outs, Transports Tagged: AAI, AMR, DAL, FAA, JBLU, LCC, LUV, SKYW, UAL, XJT

Top Day Trader Alerts (AIB, IRE, BKS, BGP, DNDN, DSCO, XJT, FTLK, PCLN, SQNM, SIRI, WFMI)

Administrator — Wed, 04 Aug 2010 12:47:44 +0000

Day traders and active traders have MANY huge movers to choose from this morning. Some of the active stocks and large movers we are tracking are Allied Irish Banks plc (NYSE: AIB), The Bank of Ireland (NYSE: IRE), Barnes & Noble, Inc. (NYSE: BKS), Borders Group, Inc. (NYSE: BGP), Dendreon Corp. (NASDAQ: DNDN), Discovery Laboratories Inc. (NASDAQ: DSCO), ExpressJet Holdings Inc. (NYSE: XJT), Funtalk China Holdings Limited (NASDAQ: FTLK), priceline.com Incorporated (NASDAQ: PCLN), Sequenom Inc. (NASDAQ: SQNM), SIRIUS XM Radio Inc. (NASDAQ: SIRI), and Whole Foods Market, Inc. (NASDAQ: WFMI). We have compiled a snapshot and added color in on each where applicable.

Allied Irish Banks plc (NYSE: AIB) said its loss deepened and it had increased bad debt items. Shares are getting crushed by 8% to $2.50 on over 100,000 shares. The Bank of Ireland (NYSE: IRE) is getting shelled on the news as well with a 4% drop to $4.48 on almost 150,000 shares.

Barnes & Noble, Inc. (NYSE: BKS) is surging now that it has put itself up for sale. Shares are up 25% at $16.10 in early indications on over 30,000 shares. Borders Group, Inc. (NYSE: BGP) is being viewed as a secondary beneficiary on the news as shares are indicated up about 7% at $1.42.

Dendreon Corp. (NASDAQ: DNDN) is higher on a research call as it was reiterated Buy at Needham based upon plant buildouts and over hopes of additional product revenues. Shares are up 5.5% at $35.70 on almost 100,000 shares.

Discovery Laboratories Inc. (NASDAQ: DSCO) is down sharply but off its lows after caution in its business outlook. Shares are down a sharp 10% at $0.28 on 220,000 shares. Shares were down over 15% in earlier indications; the 52-week range is $0.17 to $1.69.

ExpressJet Holdings Inc. (NYSE: XJT) is the biggest gainer after it was disclosed that SkyWest is acquiring it for a mere $133 million. Shares are up 100% at $6.58 on over 100,000 shares.

Funtalk China Holdings Limited (NASDAQ: FTLK) has decided to postpone its previously announced proposed public offering of approximately 12,000,000 ordinary shares by selling shareholders. Shares are surging by 22% to $8.64 on about 50,000 shares.

priceline.com Incorporated (NASDAQ: PCLN) is surging this morning after beating earnings estimates and considerably raising guidance. Shares are up 17% at $270.37 on about 50,000 shares. Keep in mind that the 52-week high is right at $273.93.

Sequenom Inc. (NASDAQ: SQNM) is trading up on active volume after the rating was raised to Buy at Soleil; shares are up 6.6% at $6.31 on over 100,000 shares in early trading.

SIRIUS XM Radio Inc. (NASDAQ: SIRI) is one of the more active stocks with over 4 million shares traded after it reported above-estimates on revenues and raised targets for 2010. Shares are up 4% at $1.05.

Whole Foods Market, Inc. (NASDAQ: WFMI) beat earnings but despite the recovery it has some sales growth items as the numbers for growth were mostly in-line after the luxury grocer reported that earnings were up 88%. This one has already run significantly higher. Shares are down almost 6% at $37.25 and the 52-week range is $24.18 to $43.18.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Pre-Market Activity, Trading Alert Tagged: AIB, BGP, BKS, DNDN, DSCO, FTLK, IRE, PCLN, SIRI, SQNM, WFMI, XJT

Airlines Hit By UBS & Swine Flu (CAL, AMR, LCC, UAUA, XJT, CPA)

247wallst — Mon, 27 Apr 2009 13:12:54 +0000

Airlines are getting hit hard this morning before the open on two issues: swine flu and an analyst downgrade. UBS has downgraded the US legacy airline sector in a broad call and the impact on some of these stocks looks exacerbated by the swine flu news. The new sector ratings were taken to NEUTRAL from BUY. Among the downgrades were Continental Airlines (NYSE: CAL). AMR Corp. (NYSE: AMR), US Airways (NYSE: LCC), and IAL Corp. (NASDAQ: UAUA). There is also a secondary tie here for both ExpressJet Holdings Inc. (NYSE: XJT) and Copa Holdings SA (NYSE: CPA).

On the Swine Flu front, health advisories to and from Mexico are starting to allow travelers to change their flight plans to or from Mexico. Continental’s former unit called ExpressJet Holdings Inc. (NYSE: XJT) operates many of the Continental flights from Mexico to the U.S..

Copa Holdings SA (NYSE: CPA) is not exactly a Mexican airline, but it was tied to Continental and is based in Panama. This may not be fair at all, but this may be close enough for US investors to avoid as it has operations in Brazil, Argentina, Chile, Mexico, Colombia, Panama, and the United States.

UBS’s note has brought to light that bankruptcy remains a risk for many of the legacy carriers even if there is a recovery. It is not forecasting that these will go into bankruptcy, but has noted that it will get close at some.

JON C. OGG

Posted in Airlines, Analyst Calls, Entertainment, Luxury, Trading Alert, Transports Tagged: AMR, CAL, CPA, LCC, UAUA, XJT

Southwest Looks Far Out To Mexico (LUV, CAL, XJT, AMR)

247wallst — Mon, 10 Nov 2008 15:26:16 +0000

Southwest Airlines Co. (NYSE: LUV) has announced its first efforts to go cross-border to our closest neighbor to the south. The discount airline carrier intends to build a codeshare partnership with Mexican carrier Volaris. Be advised that this does mean that Soutwest’s orange planes will be seen over the skies of Mexicio and this codeshare agreement won’t take effectimmediately. But if Volaris is able to expand between now and when this starts, it could eventually give Southwest a shot at capturing some of the business that has historically gone to competitors like Continental Airlines, Inc. (NYSE: CAL), ExpressJet Holdings Inc.(NYSE: XJT), and AMR Corp. (NYSE: AMR).

The two airlines have completed the first step in creating arelationship that will eventually allow the carriers to offer customersa seamless travel experience to a wide array of destinations. This initial agreement puts the two airlines on a path toward bringingmore low fares across the U.S./Mexican border. The airlines plan toannounce codeshare flight schedules and additional features regardingthe partnership by early 2010.

Volaris is a new carrier which was founded in 2006 and currently serves39 routes in 23 cities throughout Mexico via a young airplane fleet of18 Airbus A319 and an A320 aircraft with an average age of 2.17 years.

Southwest’s southwest.com web site will become a distribution channelfor Volaris’ existing Mexican and future cross-border flights in theSpring of 2009 to purchase flights on Volaris’ existing flights. Thisoption will be available for existing Volaris flights before actualconnecting codeshare flights are available for purchase.

The airlines are not announcing routes, schedules, or fares at thispoint, but the agreement will eventually allow each carrier to checkboth customers and baggage to a final destination. Other areas ofpossible cooperation include frequent flier options, ground handling,and cargo.

For Southwest, this follows its international market efforts after theannouncement of a codeshare pact with Canadian carrier WestJet. Wedon’t know how long it will take nor how this will work, but Southwestsaid it will continue on its path for international codeshareagreements.

Certain details of the codeshare and elements of the partnership aresubject to approvals by both the U.S. and Mexican governments andregulatory agencies.

Continental Airlines, Inc. (NYSE: CAL) and ExpressJet Holdings Inc.(NYSE: XJT) are currently the predominant carrier from Houston out ofthe IAH hub into Mexico. AMR Corp. (NYSE: AMR) flies into Mexico atwhat looks to be more than 50 destinations from its hub in Dallas.Those are the two biggest destination routes from Texas, although thisdoes not take into consideration anything in and out of San Antonio,nor does it take into consideration any of the other competing citieswhere Southwest flies in and out of throughout the U.S. which also havedirect flights into cities in Mexico.

Jon C. Ogg
November 10, 2008

Posted in Airlines Tagged: AMR, CAL, LUV, XJT

The 52-Week Low Club

247wallst — Thu, 27 Sep 2007 15:07:38 +0000

Expressjet Holdings (XJT) Airlines still hurt by rising oil and failing economy. Falls to $3.09 from 52-week high of $9.61.

Standard Pacific (SPF) Home builder. Down to $5.66 from 52-week high of $30.52.

Akamai Technologies (AKAM) Content delivery over the internet getting squeezed by price cutting. Down to $28.13 from 52-week high of $59.69.

Panacos Pharmaceuticals (PANC) Still falling due to CFO departure and analyst downgrade. Falls to $1.48 from 52-week high of $7.23.

Douglas A. McIntyre

The 52-Week Low Club

247wallst — Fri, 21 Sep 2007 18:03:50 +0000

Advance Amer Cash (AEA) Payday loan company forced to close a number of locations. Down to $10.44 from 52-week high of $19.05.

Expressjet Holdings (XJT) Bad days for airlines. Drops to $3.62 from 52-week high of $9.61.

Bearingpoint (BE) Ongoing financial problems at consulting firm. Down to $4.33 from 52-week high of $9.

Time Warner Cable (TWC) Most cable stocks down due to competition from telecom companies. Falls to $31.14 from 52-week high of $44.

Circuit City (CC) Still falling due to poor financial results. Drops to $8.42 from 52-week high of $29.31.

Pool Corporation (POOL) Swimming pool business following home builders down. Drop to $24.29 from 52-week high of $42.75.

Douglas A. McIntyre

The 52-Week Low Club

247wallst — Wed, 12 Sep 2007 15:12:08 +0000

Labranche (LAB) Being a specialist firm trading stocks has gotten to be nasty business. Shares drop to $4.65 from 52-week high of $12.21.

King Pharmaceuticals (KG) Still taking hammer because patent on top drug was found to be invalid. Down to $12.26 from 52-week high of $22.25.

International Rectifier (IRF) CEO on leave due to audit. Shares just keep falling. Drops to $31.37 from 52-week high of $44.36.

Expressjet Holdings (XJT) Oil up. Bad time to be in airline business. Falls to $3.68 from 52-week high of $9.61.

Steven Madden (SHOO) Director steps down. Shares now off to $20.02 from 52-week high of $44.70.

Home Solutions (HSOA) Provider of construction business during real estate recession. Shares off to $2.45 from 52-week high of $8.24.

Caribou Coffee (CBOU) Like Starbucks (SBUX), only smaller. But, similar drop in stock price. Down to $5.74 from 52-week high of $9.27.

Douglas A. McIntyre