By Ben Berkowitz April 23 (Reuters) - A range of U.S. companies are warning investors that sequestration is starting to bite, but executives are still unclear how deep the wound will be. The U.S. federal government began implementing across-the-board spending cuts last month, known formally as sequestration but more commonly called "the sequester." It has meant everything from furloughs for air traffic controllers to fewer planes for the U.S. Navy to smaller subsidies for farmers. So far this earnings period, executives from Lockheed Martin to IBM and Delta Airlines are flagging how those U.S. budget cuts cost them some sales in the first quarter. But the bigger concern is how much they might lose in the months to come as the budget cuts begin to really take hold - and getting a detailed forecast has proven hard to come by. "Sequestration is a reality, but it's unfolding slowly at this time," United Technologies Chief Executive Louis Chenevert said in an interview Tuesday. "We will understand more what sequestration does as we get to the end of the year." Market strategists said the fears about sequestration feed into a broader decline in confidence, underlined by a recent rise in unemployment claims and decline in factory activity in parts of the country. "These CEOs saying it's all three to four months out, it kind of plays into that," said JJ Kinahan, chief derivatives strategist at TD Ameritrade. "The sequester is one more data point for people to worry about." Yet investors are not spooked. Since March 1, when the sequester kicked in, the S&P is up 4 percent, continuing a sharp run that started last November. AIRLINES HURT WORST So far, the biggest impact seems to be on airlines, which are cancelling flights and rebooking customers because of the air traffic control furloughs. They started on Sunday and have already begun to affect air travel, prompting members of Congress to demand the Federal Aviation Administration delay further cuts. But Transportation Secretary Ray LaHood warned on Tuesday in a CNBC interview that the furloughs will only get worse. For some companies, the squeeze is at two ends. Delta Air Lines said ticket revenue is down because of reduced government travel spending; and at the same time, it is having to cancel regional flights and rebook customers because of the air traffic furloughs. Jean Covelli, president of The Travel Team agency in Buffalo, said many business customers are rethinking plans for trips now that the furloughs have started. "There's a whole domino effect that this is causing. I don't think it's going to get any better," she said. Airlines have supported this notion. US Airways said its government revenue fell more than 30 percent in March, a result of the budget cuts as well as the Easter holiday shift into March from April last year. "Leisure demand is still good," US Airways President Scott Kirby said on a conference call. "Business demand remains volatile, however, and as long as the sequester stays in place I expect the government related demand will continue to be depressed." HURTING BUSINESS Lockheed Martin Corp, the Pentagon's biggest weapons supplier, said Tuesday that sequestration hasn't really hit yet, but will build over the second and third quarters as the government implements fiscal 2013 cuts that keep it from spending on new equipment. That sense of uncertainty - something is happening though it's too early to quantify and may still get worse - echoes last week's warnings from IBM. "It's hard to measure. I can tell you that our U.S. federal business was down 13 percent, which was certainly a drag on the U.S. performance," IBM Chief Financial Officer Mark Loughridge said on a conference call after the company turned in one of its most disappointing quarters in recent memory. To some degree, though, the delayed impacts of sequestration could be a good thing. The longer it takes to make cuts, the more time there is for federal agencies to change their priorities and shift their cuts from one area to another, potentially sparing projects that otherwise might have been on the chopping block. The Boston Marathon bombings and recent attempts to blow up a Canadian train could highlight the need for increased defense spending, analysts and investors offer as one example of potentially shifting priorities. Wall Street has largely factored in sequestration's effect on United Technologies, for example, since the company's Otis elevators and Carrier air conditioners continue to sell at a good clip. U.S. military sales comprise roughly 17 percent of United Tech's revenue, down from 21 percent a few years ago. "Because United Tech is such a large company, there's a lot of different parts operating in different cycles," Edward Jones analyst Christian Mayes said. "That's the benefit of owning shares in this company."