U.S. Airlines to Discuss Quake Impact, Analysts Say
United Continental Holdings Inc. (UAL) and Delta Air Lines Inc. (DAL) may detail at a conference tomorrow how Japan’s earthquake and radiation leaks have affected demand and plans for future flight capacity.
Executives from the largest U.S. airlines likely will discuss the issues, along with rising fuel prices and fare increases, at a JPMorgan Chase & Co. (JPM) conference in New York, said Helane Becker, analyst at Dahlman Rose & Co. Details may also come in U.S. regulatory filings prior to their remarks, Will Randow, a Citigroup Inc. analyst, said in a report.
Changes to Japanese flights by other carriers would follow a March 17 decision by Delta to suspend flights at Tokyo’s Haneda airport, while continuing operations at its Tokyo Narita hub. United Continental said March 16 that demand had fallen on Japan routes and indicated it might reduce capacity.
“We are starting to see schedule changes which may be the early indications of a downward trend in bookings,” Michael Linenberg, a Deutsche Bank AG analyst, said in a report today. He estimated that Delta’s two suspended Tokyo routes represent 12 percent of the airline’s Asia-Pacific capacity for February and 1.5 percent of its total capacity.
“As both of these routes are being served with Delta’s 403-seat Boeing 747-400s, the capacity cut is significant,” Linenberg said.
Delta declined to provide “that level of breakdown” on the suspension of the Haneda-Detroit and Haneda-Los Angeles routes, Betsy Talton, a Delta spokeswoman, said in an e-mail.
The U.S. is the largest international market connecting to Japan, with 9.2 million passengers and $10.5 billion in revenue annually, Randow said. Atlanta-based Delta, Chicago-based United Continental and AMR Corp. (AMR)’s American Airlines, based in Fort Worth, Texas, have the biggest direct revenue exposure to Japan among U.S. carriers.
A 9.0-magnitude earthquake and resulting tsunami hit Japan on March 11, causing damage to a nuclear power plant that developed radiation leaks. A no-fly zone has been placed around the Fukushima Dai-Ichi plant, which is about 135 miles (220 kilometers) north of Tokyo.
The 12-member Bloomberg U.S. Airlines Index rose 1.3 percent today along with broader markets as concern eased that Japan would suffer a nuclear meltdown. The index has fallen 7.9 percent this year.
The Allied Pilots Association, which represents American Airlines pilots, is in talks with the carrier about moving crew layovers to cities other than Tokyo, the union said on its website. British Airways Plc, Germany’s Deutsche Lufthansa AG and Italy’s Alitalia SpA last week moved their crews out of Tokyo on worry about radioactive fallout.
“Tokyo is a safe place to fly into and out of, as well as overnight for our crews,” Tim Smith, an American Airlines spokesman, said in an e-mail today. “We continue to do that and -- just as we have since the beginning of this situation --we’ll continue to closely monitor the facts involving radiation or any other potential issue there.”
Delta, United Continental and American have offered refunds for some Tokyo flights and are waiving fees to change booked trips to some Japanese cities.
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