Daily analyst comments

On September 11 the UTAir airline released its operating results for 8M 2008. The company says its passenger turnover sped up by 15.2% y-o-y between January and August to 3.6 billion passenger-kilometers. The flying time of the helicopter division amounted to 48,800 hours, up 12.3% on the year-earlier period.

Table. Utair airline: basic operating results in 8M 2008

Indices	Unit of measure	8M 2008	8M 2007	Change, %
Transport aviation
Passenger turnover	Thou passenger/km	3 607 688	3 131 740	15.2%
Passengers numbers	Number of people	2 258 050	1 943 091	16.2%
Flying time	hours	99478	84005	18.4%
Mail shipments	tons	1 335.50	1 108,50	20.5%
Aviation operations (helicopters)
Flying time	hours	48761	43438	12.3%

Source: company data

We are downbeat on the posted operating results, which are indicative of a slowdown in the company. The company’s passenger turnover rose by 25.3% in the reporting period. In our view, the main reason for the slowdown lies in a more than 50% spike in jet fuel prices. We expect a further slowdown in the company’s operations in the short term, at least while aviation kerosene prices remain at their current high level as a result of the monopoly position enjoyed by refueling services at airports.

Our recommendation on UTAir shares is now under review. We believe that exorbitant jet fuel prices will continue to negatively affect the company’s business, and its profitability, making its shares risky for investors.