Yen Called Drag on Delta as United Feels Currency Pain

Japan’s yen, weakened by unprecedented monetary easing, damped a benchmark revenue gauge at Delta Air Lines Inc. and threatens to curb fares and capacity on United Airlines flights to the island nation.

Delta’s passenger revenue for each seat flown a mile last month rose 0.5 percent after accounting for 1 percentage point of “negative impact” from the yen, the carrier said in a statement yesterday. Atlanta-based Delta said trans-Pacific traffic climbed 0.5 percent, the least of any non-U.S. region.

United also felt the effect of a devalued yen to a lesser, unspecified degree, Chief Executive Officer Jeff Smisek told reporters after a speech yesterday in Chicago, where the world’s biggest airline is based.

The Bank of Japan has been working to weaken the currency under the policy dubbed Abenomics, for Prime Minister Shinzo Abe, to revive the third-biggest economy after more than a decade of deflation. The yen fell 13 percent against the dollar this year through yesterday, paring the value of revenue converted back into the U.S. currency.

United parent United Continental Holdings Inc. has yet to report operating results for May. AMR Corp.’s American Airlines, the third-biggest U.S. carrier after United and Delta, also hasn’t disclosed details about its performance last month.

While tickets bought before the yen’s decline blunted the fallout, a sustained devaluation poses risks for United’s pricing and flights to Japan, Smisek said after the speech, according to Reuters and the Wall Street Journal.

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