U.S. airlines grapple with storm

ATLANTA/CHICAGO Wed Feb 2, 2011 6:09pm EST

ATLANTA/CHICAGO (Reuters) - Major U.S. airlines cancelled more than 6,300 flights on Wednesday for a second straight day as a monster winter storm paralyzed air travel and threatened to erode revenues for carriers hit the hardest.

The storm blasted the U.S. Northeast and the Midwest, where the blizzard was on track to dump the most snow on Chicago in more than 40 years.

Flightaware.com, a website that tracks flights, estimated total U.S. cancellations at 6,308 as of late afternoon.

"This has really been a major shutdown. I haven't seen one this large in many years," said Terry Trippler, owner of travel website Airlinerulestoknow.com.

"Other than September 11, I haven't seen it shut down to this degree at all," he added. Trippler said it would be several days for airlines to work through the glut of displaced travellers.

United Airlines, Delta Air Lines Inc and American Airlines all suspended operations at Chicago O'Hare International Airport, the second busiest airport in the United States.

"We're totally out of Chicago today, 920 cancellations in and out," said American Airlines spokesman Tim Smith. "Operations in New York (are) ramping up somewhat this afternoon."

United, which merged last year with Continental, scrapped nearly 1,900 flights between the two airlines.

Delta said it cancelled more than 1,300 flights systemwide. American, a unit of AMR Corp, reported 1,587 cancellations for the day. US Airways Group cancelled 582 flights for the day, with its operations in Philadelphia, New York and Boston the hardest-hit.

Southwest Airlines cited 850 cancellations on Wednesday tied to storms.

Airlines typically build winter weather delays and cancellations into their annual budgets, but large-scale disruptions that result in lost business and higher operational costs can hit quarterly earnings.

For example, Delta said cancellations tied to severe winter weather cut its fourth-quarter earnings by $45 million (28 million pounds), while United Continental cited a $10 million hit to its fourth-quarter profit from storms.

"I expect the airlines will take substantial charges, but I haven't yet calculated what the amount could be," said Basili Alukos, an equity analyst at Morningstar.

A report on Wednesday from the International Air Transport Association (IATA) said severe winter weather in North America and Europe has "put a dent in the industry's recovery."

The airline industry is clawing its way out of a downturn that was exacerbated in recent years when the recession drained travel demand.

IATA said bad weather cut 1 percent off total traffic in December.

Shares of major airlines closed lower on Wednesday. The Arca Airline index fell 2.51 percent. United Continental fell 50 cents to $24.76, Delta was down 44 cents at $11.35, and AMR slid 15 cents to $7.03 on the New York Stock Exchange.

(Reporting by Kyle Peterson and Karen Jacobs; Editing by Matthew Lewis and Maureen Bavdek)