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雷达卡
Airlines
3Q09 Review: Staying on the
Sidelines for Now
Updating Estimates: We have adjusted our estimates
on the back of 3Q09 earnings. Broadly, our estimates
and YE09 valuations are reduced as a result of cautious
guidance updates and an increase in our forward fuel
assumption to near current market rate (now $75/bbl oil
+ $10/bbl crack spread vs. prev. $65/bbl oil + $10/bbl
crack spread). We remain below consensus in 2010
across all of the airlines we cover (Page 7); thus, we see
risks to near-term earnings revision trends.
Preview vs. Review: 3Q09 results were characterized
by inline / slightly better-than-expected results (Page 5),
cautious forward commentary, and negative near-term
fuel guidance. The airlines exceeded our 3Q09
estimates through small revenue and cost beats, but
company guidance was generally consistent with our
view that the recovery will be gradual and current fuel
price trends are outpacing revenue growth.
Maintain In-Line View. While we believe a recovery is
underway, we remain on the sidelines for now with an
In-Line View on airlines. There are 5 key trends we’re
watching as signals to become constructive: (1) Lower
fuel prices mitigate downward EPS revisions and
negative sentiment overhang; (2) Revenue surprises to
upside; (3) Consensus revisions to reasonable levels
given our revenue / fuel outlook; (4) Elimination of the
liquidity risk overhang; (5) Further sell-off in shares
making valuation more compelling.
What’s next? Beginning Monday after the close (CAL
RASM), monthly traffic reports should show continued
gradual improvement in revenue trends. Upside
surprises are unlikely given recent guidance on 3Q09
calls; however, continued investor “hopes” for beats vs.
guidance are a near-term risk to shares. November
results, company investor days, and the Morgan Stanley
December 2nd Transportation Corporate Access Day are
the next key catalysts for airline shares, as investors
look for indications of travel demand strength / recovery.
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