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US Airways Traffic Declines

 April 06, 2010 11:49 PM

US Airways Group Inc (LCC) announced on Monday that its March traffic measured by revenue passenger miles (RPM) declined 0.1% compared to prior-year levels. This was led by a 0.1% decline in mainline revenue passenger miles and 1.1% decline in the Express segment. The airline flew 5.08 billion miles in the reported month, down from 5.09 billion miles in the prior-year period.

Passenger load factor decreased 130 basis points to 82.6%. Capacity declined 1.8% from the prior year period to 6.2 billion available seat miles (ASM).

US Airways reported an increase of 18% in consolidated passenger revenue per available seat mile (PRASM). PRASM is used to measure unit revenue.

During the month of March, US Airways made a number of announcements. It stated an agreement with Delta Air Lines (DAL) to transfer 12% of takeoff and landing slots between the carriers at New York's LaGuardia and Washington's Reagan National airports to four airlines -- AirTran Holdings Inc (AAI), Spirit Airlines, WestJet, and JetBlue Airways (JBLU). It also announced the launch of new wireless product named Gogo Inflight Internet, which would allow passengers to use the Internet while on board. The airline intends to equip all its fleets with this new technology by mid-2010.

Estimate Revisions

Over the last 30 days, 2 of the 7 analysts covering the stock have upgraded their estimates for the first quarter of 2010, while no downward revisions were witnessed. Currently, the Zacks Consensus Estimate for the first quarter is an operating loss of 67 cents per share, which would be up 70.6% from the year-ago quarter.

The higher number of upward estimate revisions for the first quarter indicates a likelihood of upward pressure on the performance of the stock in the near term.

With respect to earnings surprises, the stock has been steady over the last four quarters, with positive surprises all through. The average remained positive at 20.9%. This implies that US Airways has surpassed the Zacks Consensus Estimate by 20.9% over that period.

The downside potential for the estimate for the first quarter, essentially a proxy for future earnings surprises, currently stands at 1.5% for US Airways.

High fuel prices coupled with low demand due to the recession lowered the profitability of almost all the airlines in the U.S. Since the demand is slowly catching up, airlines are trying to recover.

Other carriers such as American Airlines announced a 2.5% surge in its March 2010 traffic. Continental Airlines (CAL) reported a traffic uptick of 5.2% and AirTran Holdings reported a 9.6% increase in traffic.


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