Air carriers peg losses from winter storms at $500 million

  • Article by: MARY SCHLANGENSTEIN , Bloomberg News
  • Updated: March 10, 2014 - 8:18 PM

Thousands of canceled flights led to millions of dollars in lost revenue.

The four largest U.S. airlines said winter storms that pounded the eastern part of the country forced cancellation of 74,500 flights in the first two months of this year.

The biggest carriers suffered the most as the storms rolled over hubs in New York, Washington, Boston and Atlanta. Heavy snow, ice and bitter cold cost Delta Air Lines Inc. $90 million in revenue and a pretax loss of $55 million, the Atlanta-based airline said Monday.

The total cost to U.S. carriers for storms extending from Dec. 1 through the end of February may be as much as $500 million on increased operating expenses and lost revenue, industry data tracker MasFlight said earlier this month. About 108,600 flights were canceled in that period, MasFlight estimated.

“We canceled, thanks to this great weather on the East Coast, 28,000 flights in the first two months of this year,” American Airlines Group Chief Executive Officer Doug Parker said in remarks at a JPMorgan Chase & Co. transportation conference in New York. “That’s up 164 percent versus last year.”

United Continental Holdings grounded 23,000 flights because of the weather, while Delta parked 17,000 and Southwest Airlines Co., 6,500.

“By Jan. 29, we already had more cancellations than in all of 2013,” Delta President Ed Bastian told the conference.

Canceled flights usually help airlines’ revenue for each seat flown a mile — an industry benchmark for profitability — because sales are spread over fewer seats. Costs on that basis — a measure of efficiency — rise for the same reason.

American’s Parker said the carrier wasn’t “positive” on the total effect of the storms on first-quarter results. The airline will provide an estimate of the full financial toll in April, American said in a U.S. regulatory filing.

American expects revenue from each seat flown a mile to increase 2 percent to 4 percent this quarter from a year earlier, consistent with prior forecasts, Parker said.

United’s operations were “significantly impacted” by the storms, the Chicago-based carrier said in a regulatory filing Monday, but did not provide a total dollar effect.

Southwest expects first-quarter unit revenue to increase three percent from a year earlier, including a less-than 1 point positive effect from the storm. Costs excluding fuel for each seat flown a mile will rise 5 percent, including 3 points related to winter cancellations, Chief Financial Officer Tammy Romo said.

  • get related content delivered to your inbox

  • manage my email subscriptions

ADVERTISEMENT

Connect with twitterConnect with facebookConnect with Google+Connect with PinterestConnect with PinterestConnect with RssfeedConnect with email newsletters

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

 
Close