Delta Air Lines will slash seating capacity to Japan as much as 20 percent through May, while American Airlines reported a "modest" revenue decline after the March 11 earthquake and radiation leaks.
The reductions at Delta will have a net effect of $250 million to $400 million, the carrier said Tuesday at a J.P. Morgan Chase & Co. conference in New York. AMR Corp.'s American is keeping its full schedule and the April 1 start of a transpacific joint venture with Japan Airlines.
American is "monitoring the situation carefully" and has the ability to shrink capacity if necessary, Treasurer Beverly Goulet said at the conference.
The U.S. carriers join Singapore Airlines and Qantas Airways' budget unit in trimming Japan flights to match waning demand. The U.S. is Japan's largest overseas travel market, with 9.2 million passengers and $10.5 billion in revenue annually, according to Citigroup Inc.
Delta has the most seating capacity generated in Japan among U.S. airlines, at about 7 percent, followed by 5 percent for United Continental Holdings Inc. and 3.5 percent for American, according to Gary Chase, a Barclays Capital analyst in New York.
United Continental Chief Executive Jeff Smisek didn't address the specific financial effects of Japan bookings during his remarks.
Losing some Japan business adds to the strain on U.S. carriers already grappling with a 32 percent increase this year in the price of jet fuel for immediate delivery in New York Harbor, as well as sales damped by winter storms.
Delta also said Tuesday that it would reduce seating capacity by 4 percentage points in 2011's second half, especially in markets where "revenue has not kept pace with fuel" such as the transatlantic. In addition, the Atlanta-based carrier is chopping departures by 25 percent at its hub in Memphis.
