Stock: Delta Air Lines (DAL) Industry: The airline industry is intensely price competitive and highly cyclical.[More...]

Frederic Ruffy submits:

Sentiment

Global equity markets are back under fire after both Standard & Poor's and Fitch downgraded Greek government issued debt, sending stock benchmarks sharply lower across Europe. Meanwhile, Dubai stocks tumbled after Moody's downgraded six government related-issuers. The credit rating agency also said that, due to deteriorating public finances, the US and the UK are testing the limits of triple-A sovereign ratings.

With no economic data to guide the market action, credit worries are once again dominating the headlines. Meanwhile, energy, metal and mining names are weak after crude oil lost $1.18 to $72.75 a barrel and gold shed $37 to $1127 an ounce. FedEx (FDX) is a bright spot and helping to lift the Dow Jones Transportation Average after the shipping company offered a brighter earnings forecast.

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Continental Airlines (CAL) announced that it will be selling $200 million of convertible notes due 2015. Interest on the notes will be payable on Jan 15 and Jul 15 of each year, beginning on Jul 15, 2010. The notes will be unsubordinated, unsecured obligations of Continental Airlines and will rank at par with all other [...]

(CAL) Continental Airlines Issues Convertible Notes

YRC Worldwide Inc. (Nasdaq: YRCW) will be replaced on the Dow Jones Transportation Average by Delta Air Lines Inc.  (NYSE: DAL). Shares of YRC dropped 13 cents to $1.01 while Delta stock slipped 24 cents to $9.92.  ...

Investors are sent a bullish signal by an indicator imbued with longtime meaning.

Airline stocks are mixed in morning activity with major carrier shares climbing after United Airlines posted a large order for new wide-body jets -- a high-profile bet on the industry’s future.

Continental Airlines (CAL) announced that it will be selling $200 million of convertible notes due 2015. Interest on the notes will be payable on Jan 15 and Jul 15 of each year, beginning on Jul 15, 2010. The notes will be unsubordinated, unsecured obligations of Continental Airlines and will rank at par with all other unsubordinated, unsecured debt. 

The underwriters to the issue have been granted an option to purchase up to an additional $30 million of principal amount of notes. The notes will not be listed on any securities exchange. 

The net proceeds from the offering of the notes will be used for general corporate purposes, which include the repayment of existing debt, funding of a portion of pension liabilities, and meeting working capital requirements. 

Morgan Stanley & Co. Incorporated (MS), Credit Suisse Securities (CS), Goldman, Sachs & Co. (GS), Citigroup Global Markets Inc. (C) and UBS Securities (UBS) are the joint book-running managers for this offering. 

During the third quarter, the airline reported core earnings of $2 million or 2 cents on a per share basis. Revenues remained weak with mainline RASM (revenue per available seat mile) down 19.1% and regional RASM down 10.9% year-over-year. The air carrier experienced weak yields and high load factors generated by the low fares caused by the recession.
 
A number of airlines have adopted a similar measure with peer American Airlines (AMR) issuing $250 million in debt during September, followed by Delta Airlines (DAL) and UAL Corp.(UAUA), who raised debts of $1.35 billion and $810 million, respectively, through issuing of notes.
Read the full analyst report on "CAL"
Read the full analyst report on "MS"
Read the full analyst report on "CS"
Read the full analyst report on "GS"
Read the full analyst report on "C"
Read the full analyst report on "UBS"
Read the full analyst report on "AMR"
Read the full analyst report on "DAL"
Read the full analyst report on "UAUA"
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