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UAL has almost good news for third quarter

The skies are starting to look a little friendlier to United Airlines (NASDAQ: UAUA). The airline reported a quarterly loss that was lower than expected. Third quarter traffic was off only 2.9%, but because United used discounts to fill seats, revenue fell 20.3% (to $4.43 billion). The key to a recovery will be getting passengers to shell out for more expensive seats. According to United's president, John Tague, "There's no opportunity here for a full revenue recovery until we get premium cabin pricing back." He doesn't know how long this is going to take, but does say that he's seen progress over the past few months.

Nonetheless, it's important not to confuse "not so bad" with "making money." UAL lost $57 million (39 cents a share) last quarter. If it hadn't had some good news on fuel hedges and accounting issues, the loss would have been 43 cents a share. Again, this is better than analysts polled by Thomson Reuters expected: they were forecasting a loss of 94 cents per share. And, the third quarter loss was much better than last year's $792 million for the third quarter.

But, it all comes down to the bottom line, and a loss is a loss is a loss.

Continue reading UAL has almost good news for third quarter

Extra airline fees to become the new 'normal'

If you think all those new airline fees were a temporary measure to help these beleaguered companies through an economic crisis, you're out of your mind. Now that they've had a taste of how much they can make by charging you for an extra bag or a little more leg room, they're hooked. More important, the fees are making up a meaningful portion of airline revenues and profits, so investors aren't likely to be satisfied with a return to normal – well, they can't. Extra fees are the new "normal."

Continue reading Extra airline fees to become the new 'normal'

Options Update: Citigroup options suggest flat movement into EPS

Citigroup (NYSE: C) closed at $5.00. C is expected to report Q3 EPS today. C options were active on October 14th with 1,117,189 contracts trading. C October 5 straddle is priced at 33c, November 5 straddle is at 72c. C November option implied volatility is at 56, December is at 56, January is at 59; verses its 26-week average of 79, according to Track Data, suggesting decreasing price movement after EPS.

UAL Corp (NASDAQ: UAUA) closed at $7.82. UAUA is scheduled to report Q3 EPS on October 20. UAUA November option implied volatility is at 80, December is at 84; below its 26-week average of 111, according to Track Data, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

United's battle over its identity

United Airlines (NASDAQ: UAUA), US Airways (NYSE: LCC) and American Airlines (NYSE: AMR), according to an influential analyst, have run out of options. Jamie Baker of JPMorgan said in a July 20, 2009 report that these companies couldn't do anything to prevent a cash crisis. They only savior available to them would have to be an outside investor. To call the position grim would be optimistic. Unfortunately, it couldn't have come at a worse time.

As Baker was walking the bear into the airline industry, United was starting to celebrate its change in direction. The carrier has improved its on-time rate, according to a USA Today report, and its operations are coming around. Despite the fact that the airline industry has been brutalized by the global recession, the airline has made some progress. Through August, the company's share price doubled, and its ascent has continued in September. So, the company is locked in an ongoing struggle to manage its identity, cope with its past and shape how the world sees it today.

The operational "makeover" has resulted in a reduction of its fleet from 601 jets in 2000 to 386 as of the summer of 2009. In terms of passenger traffic, it's in the #4 spot in the United States – trailing Delta (NYSE: DAL), Southwest (NYSE: LUV) and American. With Q2 revenues off 25.2% year-over-year, however, drastic measures are still necessary.

Continue reading United's battle over its identity

DOT overrides Justice, Continental Airlines wins antitrust relief

Continental Airlines (NYSE: CAL) just got the relief it needs to compete. Despite resistance from the Department of Justice (which can only recommend), the Department of Transportation has granted the airline immunity from antitrust laws. This clears the way for Continental to work with United Airlines (NASDAQ: UAUA) -- and other carriers -- on international routes. Now, the airline can join Star Alliance, which already has antitrust immunity.

At the same time, DOT approved a joint venture among Continental, United, Lufthansa (OTC: DLAKY) and Air Canada. This new relationship would involve trans-Atlantic routes.

Continue reading DOT overrides Justice, Continental Airlines wins antitrust relief

Options Update: Airliner volatility at low end of range

AMR Corp (NYSE: AMR) closed at $5.20. WTI Crude oil is recently up 1.57% to $67.16 according to Bloomberg. AMR July and November option implied volatility of 94 is below its 26-week average of 115, according to Track Data, suggesting decreasing price movement.

UAL Corp (NASDAQ: UAUA) closed at $5.29. UAUA July option implied volatility is at 102, December is at 111; below its 26-week average of 128, according to Track Data, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

AMR beats in Q1, shares see a bid

AMR Corp. (NYSE: AMR), the parent of American Airlines, reported earnings for the first quarter on Wednesday. Revenues decreased 15%, and on an adjusted basis, the company lost $1.30 per share. According to this source, the market was calling for a loss of $1.62 per share. Since management was able to beat by such a wide margin, Wall Street decided to reward the stock by bidding it up over 20% (that's how the shares were trading at the time I started this article).

Airlines are still having a problem with the economy. Consumers aren't traveling as much, businesses are cutting back on sending executives across country. Indeed, I'm sure the summer months are going to see a lot of vacation plans being eliminated as people decide to stay closer to home.

Continue reading AMR beats in Q1, shares see a bid

Analyst calls: AMR, DAL, UAUA, RYAAY, BIIB, SHW, EQ, INTU, NYT, GOOG, YHOO ...

Analyst upgrades:
  • Calyon upgraded major network carriers based on falling oil prices and capacity cuts. The analyst is positive over the next 12 months but cautious short-term given the uncertain economy, and volatile markets and oil prices. AMR Corp (NYSE: AMR) and Delta Air (NYSE: DAL) were upgraded to Add from Neutral and UAL Corp (NASDAQ: UAUA) was raised to Neutral from Reduce.
  • Ryanair (NASDAQ: RYAAY) was upgraded at Citigroup to Buy from Hold.
  • Boardwalk Pipeline (NYSE: BWP) was raised to Buy from Hold at Deutsche Bank.
  • Cowen lifted Biogen Idec (NASDAQ: BIIB) to Outperform from Neutral.
  • JP Morgan upgraded Choice Hotels (NYSE: CHH) to Neutral from Underweight following the better-than-expected Q3 report.
  • Oppenheimer upgraded shares of Integra LifeSciences (NASDAQ: IART) to Outperform from Perform on valuation, the company's minimal exposure to economic conditions, and expectations for margin improvement and a rebound in organic growth.
Analyst downgrades:

Continue reading Analyst calls: AMR, DAL, UAUA, RYAAY, BIIB, SHW, EQ, INTU, NYT, GOOG, YHOO ...

UAL bankruptcy rumors untrue: Stock plunges 76%, old news story reportedly the culprit

UAL Corp. NASDAQ: UAUA) shares were halted Monday following rumors the company was filing for bankruptcy.

MarketWatch is reporting that UAL said the rumor is completely untrue.

Apparently, an old news item on United Airlines filing for bankruptcy somehow resurfaced on the Chicago Tribune newspaper Web site, CNBC reported. The sell-off nearly wiped out the company's share price, as UAUA, which opened trading at $12.17 this morning, plummeted (according to original reports) 99.92% to 1 cent before being halted. Since then most reports say the stock plunged 76% to $3 (see update for clarification).
[Update 12:35 pm: United issued a statement, saying that the bankruptcy reports are "completely untrue," and that it was actually the "irresponsible posting of a 6-year-old Chicago Tribune article by the Florida Sun Sentinel newspaper website with the date changed" (not on the Tribune site as CNBC reported).
While several sources, including Bloomberg, have UAUA stock plunging to 1 cent on the rumor, most now, including the Nasdaq site, have $3 as the low.]

This isn't the first time rumors in the age of the Internet have caused stocks to plunge, even whole markets. Just recently, Bloomberg had its own snafu when it inadvertently published its updated obituary for Steve Jobs, Apple Inc.'s (NASDAQ: AAPL) CEO. While that didn't cause any reaction as it was caught in time, last year, markets crashed because a website reported of an imminent U.S. strike of Iranian nuclear installations.

Continue reading UAL bankruptcy rumors untrue: Stock plunges 76%, old news story reportedly the culprit

Newspaper wrap-up: UAL Corp. to drop 70 more jets

MAJOR PAPERS:
  • In a move to help cut expenses and save on fuel prices, UAL Corporation (NASDAQ: UAUA), parent of United Airlines, will reduce its 460 airplane fleet by 70 jets. Not yet known is how may jobs will be affected, the Wall Street Journal reported.
  • In an all stock deal, J.M. Smucker Co. (NYSE: SJM) is expected to buy Folgers coffee from The Proctor & Gamble Company (NYSE: PG) for an estimated $2B, according to the Wall Street Journal. Folgers, the best selling ground coffee in the U.S., has annual sales of about $1.6B.
  • The Financial Times reported that Lehman Brothers Holdings Inc (NYSE: LEH) lost $500M-$700M on some of its hedging positions in Q2, which have contributed to a larger than expected loss that could result in the bank raising more capital by selling a stake to an outside investor. Lehman has begun negotiations with potential investors, including asset managers and Asian banks, sources said.
OTHER PAPERS:
  • According to sources, the Rocky Mountain News reported that troubled home builder Beazer Homes USA Inc (NYSE: BZH) is pulling out of Colorado. Beazer, which is being investigated for mortgage fraud by several government agencies, has built homes in the suburbs of Denver and in Colorado Springs.

Newspaper wrap-up: United Airlines puts US Airways on hold, talks to Continental

MAJOR PAPERS:
OTHER PAPERS:
WEB SITES:
  • AppleInsider reported that Apple Inc (NASDAQ: AAPL) is expected to announce a back-to-school deal soon that will encourage students to buy new Macs by offering some of the largest incentives in the history of the company.

Newspaper wrap-up: Heinz expected to raise earnings, sales projections

MAJOR PAPERS:
  • H.J. Heinz Co. (NYSE: HNZ) is today expected to increase its sales and profit projections for the next two years, as it reports results of its fiscal year ended April 30. The Wall Street Journal reported that sales are to grow 6% or higher from 4%, while earnings per share growth for the next two years is projected to grow between 8% and 11% from the earlier projection of 7% to 9%.
  • It appears that Vistaprint Limited (NASDAQ: VPRT), a graphic design services and printed products company, counts on referral fees from pop up rewards programs on it website for a certain amount of its revenue and profit and also relies on the referral of its customers to outside firms offering rewards programs, which turns out to be a monthly fee for services such as discounts on movies and amusement parks, according to the Wall Street Journal's "Heard on the Street". Some believe the stock, whose shares have plummeted over concerns of slowing revenue and slimmer gross margins, may be trading too high for its own good.
  • According to people familiar with their plans, the Financial Times reported that the CEOs of UAL Corporation's (NASDAQ: UAUA) United Airlines and US Airways Group (NYSE: LCC) will today meet to discuss the carriers' potential merger agreement.
OTHER PAPERS:
  • The Independent reported that for the second time this month, Barclays Plc (NYSE: BCS) revised lower its calculation of analysts' consensus for its full-year profit, cutting its 2008 figure by nearly 8% to GBP5.876B pre-tax; Barclays cut the calculation 15% two weeks ago.

Option Update: UAL Corp volatility elevated as shares collapse 25% after EPS

UAL Corp (NASDAQ: UAUA) is recently down $4.32 to $17.00.

Soleil says: "Lower passenger revenue and higher oil prices relative to our model led UAUA to a worse than expected Q108 loss of ($4.45)."

UAUA call option volume of 6,743 contracts compares to put volume of 6,642 contracts. UAUA May option implied volatility of 101 is above its 26-week average of 76 according to Track Data, suggesting larger price movement.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

United Airlines (UAUA) pasengers brace themselves for travel delays

If you have a trip planned on United Air Lines, Inc. (NASDAQ: UAUA) over the next couple of days, you may want to call ahead and verify that your flight is still on schedule. According to news reports today, the airline is going to be performing comprehensive inspections of 52 of its 777 aircraft.

Air travelers have been dealing with delays for the past week as all the major airlines are working to get all their planes inspected and given the "all clear" by the FCC. Last week, we saw major cancellations and delays for travelers flying American Airlines (NYSE: AMR) and Delta (NYSE: DAL) as those two carriers were having scores of planes inspected for potential problems with their wiring bundles.

The United inspections are looking at the fire suppression system in the cargo bays. The company wants to make sure that this system is working correctly, and notified authorities when it discovered that one of the five bottles in the suppression system was skipped over during the last inspection of the system.

Continue reading United Airlines (UAUA) pasengers brace themselves for travel delays

Newspaper wrap-up: Lufthansa could take stake in Continental, United combination

MAJOR PAPERS:
OTHER PAPERS:
WEB SITES:

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Last updated: November 09, 2009: 11:27 PM

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