American, United lead declines in air traffic
American Airlines and United Airlines said passenger traffic fell 12 percent last month, the most among U.S. carriers, as the recession damped business and leisure travel.
Delta Air Lines Inc., the world's biggest carrier, is set to release January results today. Reports from its domestic peers this week showed consumers kept cutting back after the worst quarterly contraction in the U.S. economy since 1982.
"Travel was really weak, especially in the back half of the month, and nobody should be too optimistic about February either," Hunter Keay, an analyst at Stifel Nicolaus & Co. in Baltimore, said today in an interview.
Traffic, measured in miles flown by paying passengers on airlines' main jet operations, dropped for an 11th straight month at AMR Corp.'s American and for the 17th month in a row at UAL Corp.'s United.
American said it had 8 percent fewer available seats for January compared with a year earlier, while United said its capacity fell 12 percent over the same period. Airlines are parking more jets and cutting more jobs after announcing plans last year to shrink their U.S. capacity by more than 10 percent.
'Playing Catch-Up'
"They're still playing catch-up to the fall in demand," Keay said.
American and United are the second- and third-largest U.S. carriers behind Delta, which vaulted to No. 1 in the world when it bought Northwest Airlines in October. Delta and Northwest still report traffic separately.
The six biggest U.S. airlines had a 2.3 percent drop in traffic last year, only the fifth decline since the U.S. Transportation Department began tracking the data.
Traffic may fall another 5 percent to 10 percent this year, Keay estimates. That would complete just the second back-to-back decline in federal figures dating to 1974.
The U.S. economy shrank by 3.8 percent in the fourth quarter, the most in 26 years, the Commerce Department said Jan. 30. With economists predicting this recession will be the longest since the Great Depression of the 1930s, the airline industry is responding by slashing more seating capacity.
Delta plans to remove as many as 50 jets this year to reduce available seats by 6 percent to 8 percent. The Atlanta- based carrier will cut 2,000 jobs through voluntary buyouts, after eliminating 6,000 positions last year.
United plans to cut 1,000 more jobs than it originally targeted as it reduces flying as much as 8 percent this year, and low-fare carrier Southwest Airlines Co. will break a 20-year growth streak as it trims capacity by 4 percent.
"The next round of significant capacity cuts is likely to be more painful with respect to cost containment, since the low- hanging fruit would already have been cut," William Greene, an analyst at Morgan Stanley in New York, wrote today in a note to clients.
The following table shows the largest U.S. airlines, ranked by traffic, and their January gain or decline in miles flown by paying passengers compared with a year earlier. The figures are from the carriers' reports, and exclude results by regional partners.