* Flight cancellations aid key revenue measure
* Analyst cuts profit estimates for carriers
March 10 Delta Air Lines on Monday said
it expects a first-quarter profit despite a revenue hit of $90
million, as winter storm cancellations consolidated passengers
onto remaining flights.
Delta said the storms hurt pretax profit for the first
quarter by about $55 million as it canceled 17,000 flights. The
carrier said it now expected operating margin, a measure of
income to costs, of 6.5 percent to 7.5 percent for the first
quarter, compared with a prior view of 6 percent to 8 percent.
But Delta said the flight cancellations aided unit revenue,
which is expected to rise 3 percent to 4 percent in the current
quarter, compared with Delta's prior view of a 2 percent to 4
percent increase. Unit revenue is an important measure of
pricing power and how full planes are for airlines.
Cancellations can help unit revenue as more travelers are
put on remaining flights.
"All in, we think it's going to be a very solid first
quarter," Delta president Edward Bastian told a J.P. Morgan
JetBlue said at the same conference it had canceled nearly
4,000 flights because of the winter storms, and Southwest
Airlines said it halted about 6,500 flights in January
JetBlue forecast its unit revenue would rise 1 percent to 2
percent in the first quarter, while Southwest outlined expected
growth of 3 percent.
Cowen & Co airline analyst Helane Becker cut her first
quarter profit estimate for Delta to 30 cents a share from 32
cents in a note to clients, citing the updated outlook.
Becker also cut her profit estimate for JetBlue Airways
for that period to 6 cents a share from 13 cents.
Flight cancellations tend to add to airline costs during the
first quarter, when winter storms hit the hardest.
American Airlines Group said in a statement on
Monday it canceled about 28,000 flights in January and February,
and while cancellations raised costs and would hurt
first-quarter profit it still expects unit revenue to rise about
2 percent to 4 percent in the period.
United Continental Holdings said it halted more than
11,000 flights in February alone. United disclosed late last
month that disruption from the storms would hurt its
first-quarter unit revenue.
Shares of the major U.S. airlines were mixed, with Delta
down 1 percent to $35.02 on Monday and United off 1.4 percent to
American was up slightly at $39.03 and JetBlue was up 0.1
percent to $9.05. Southwest shares were up 1 percent to $23.34.