US airlines do better than expected after hurricanes

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October 11, 2017
Hurricane Irma airlines impact
A satellite image of Hurricane Irma. Source: NOAA

US carriers are faring better than expected after the battering they received from recent hurricanes and are keen to show they are doing their bit for disaster relief.

American Airlines, which cancelled 8000 flights due to three storms, put the negative impact  on pre-tax earnings of hurricanes Harvey, Irma and Maria at $US75m.

But it said in an investor update Tuesday that it now expects its third-quarter pre-tax margin before abnormal items to be 9 to 11 percent instead of its previous guidance 8.5 to 10.5 per cent.

“The Company now expects its third quarter total revenue per available seat mile (TRASM) to be up approximately 0.5 to 1.5 percent versus. 2016,’’ the update said. “The improvement in TRASM versus the company’s previous guidance of flat to up 1.0 percent is due to stronger than anticipated yield performance.”

American added flights, capped fares and provided waivers to help passengers affected by the hurricanes. It has since transported more than 1.5 million pounds of relief goods to stricken areas as well as donated almost $US2 million to the Red Cross.

Delta Air Lines expects an operating margin of 15.5 to 16.5 per cent after taking a $US120m hit from Hurricane Irma.

The powerful storm saw 2,200 Delta flights cancelled from September 7-12 at airports in Florida, the Caribbean and Georgia, including the company’s Atlanta hub.

The airline’s September mainline completion factor fell two percentage points compared to the previous year to 97.9 percent, on-time performance dipped 1.8 points 84.4 percent and the number of passengers boarded fell 2.3 percentage points to 14,652,094.

However,  Delta saw a marginal 0.3 per cent rise in group and domestic traffic as measured by revenue passenger miles.

The airline said its Hurricane relief efforts included the addition of 12,000 seats to Florida and Caribbean markets to help evacuation efforts related to Irma, capped fares, customer waivers and $US1.75m provided to Red Cross organizations.

United Airlines saw September consolidated traffic fall 1.6 percent compared to last year as capacity rose 1.7 per cent to push down the load factor by 2.7 points.

United, whose Houston hub was battered by Hurricane Harvey,  did not give an estimate of financial impact but chief financial officer Andrew Levy said in September the airline  had reduced its current quarter unit revenue guidance by the equivalent of  $US400 million.

He attributed this to Harvey, a challenging introduction of basic economy seats, competition from ultra-low-cost carriers and weak traffic in the Pacific.

Domestic traffic was down 1.9 per cent but the big impact from the storm was on Latin routes, where regional traffic was down 21.1 per cent compared to the previous September.

Consolidated passenger numbers fell 2.7 percent to 11.65 million.

Nonetheless, United president Scott Kirby noted the airline recorded its best ever consolidated on-time departure performance for September in the latest results.

“Our team accomplished this while leading one of the largest relief and recovery efforts in our company’s history,’’ he said. “To date, United has provided cargo capacity and flights to deliver over 1.5 million pounds of relief supplies to people in need in Texas, Florida, Puerto Rico and the Caribbean.

“And thanks to generous donations from our customers and employees with supporting funds from the company, our CrowdRise fundraising campaign has raised more than $US3 million to support our humanitarian aid and disaster relief partners”