Airline shares suffer

via CAAI

Monday, 20 December 2010 15:00 Catherine James

AIRLINE industry group International Air Transport Association (IATA) forecast a drop in global earnings for airlines last week, putting pressure on the share prices of regional carriers which operate in the Kingdom.

Thai Airways shares fell 3.7 percent after the Tuesday announcement to 52.25 baht (US$1.73). It continued to decline with a 4.98 percent drop on Wednesday – its largest one day fall in six months – and closed the week 12 percent below its Monday open at 49.5 baht.

Cathay Pacific, the Hong Kong-listed parent of Dragon-Air, saw its share price fall 7.5 percent over the week to HK$22.2 (US$2.85) Friday. It posted its biggest slide for the week on Wednesday, falling up to 6.8 percent - the biggest intraday decline since January 22.

Singapore Airlines, the world’s second-biggest carrier by market value and parent of Silk Air, slid 2 percent on the city state’s national exchange Wednesday to S$15.46 (US$11.77). The fall continued over the week, closing on Friday at S$15.08.

China Airlines bucked the trend, climbing 2.3 percent in Taipei trading over the week, closing at NT$24.35 (US$0.81). While the share price fell 0.41 percent Tuesday following IATA’s release, it made up for the loss on Wednesday as its chairman resigned, and prices climbed further by Friday’s close.

IATA revised its industry outlook for 2011 to US$9.1 billion net profit, up from its September forecast of $5.3 billion. Nevertheless, shareholders reacted given the outlook is substantially below 2010’s expected $15.1 billion net profit.

IATA summed up the industry’s prospects with the headline of the release saying “Improved profitability but margins still pathetic”.

ADDITIONAL REPORTING BLOOMBERG