Delta Airlines planes are seen parked at Seattle-Tacoma International Airport on June 19, 2024 in Seattle, Washington.
Kent Nishimura | Getty Images
Airlines are reporting better unit revenue for the end of summer, a sign that customers will continue to pay more to fly in the coming months.
Alaska Airlines on Thursday raised its third-quarter earnings forecast to a range of $2.15 to $2.25 per share from an earlier outlook of no more than $1.60 per share. It also said it expects unit revenue to rise as much as 2%, after previously estimating flat to “positive” unit revenue growth over the past year.
Delta Air Lines said domestic and transatlantic unit revenue would rise in September from last year, although it said that CrowdStrike A shutdown in July will mean unit sales won’t rise more than 1% compared with an earlier forecast of up to 4% higher for the quarter. Delta said it expected a $500 million hit from the outage and its aftermath, when it canceled about 7,000 flights.
Alaska said it had a tailwind from the outage, which affected Delta customers more than those on other airlines.
“While capacity remains in line with prior expectations, revenue performed better than expected due to additional revenue in July related to industry-wide CrowdStrike disruptions and stronger performance in August and September,” said Alaska in a title deposit.
Delta Chairman Glenn Hauenstein told a Morgan Stanley conference call Thursday that Delta sees no long-term impact on bookings from the shutdown.
Airlines are struggling with record passenger numbers but lower fares and lower-than-expected pricing power. That seems to be changing.
Wednesday’s US inflation report showed the airline price index rose 3.9% in August after five straight months of decline.
Frontier Airlines said on Wednesday it may break even this quarter, on an adjusted basis, after previously forecasting margins ranging from -3% to -6% as capacity eased. last week, JetBlue Airways raised its forecast for unit revenue growth for the current quarter due to higher demand and the benefit of “re-accommodating customers affected by other airlines’ cancellations due to technology outages in July.”
Airlines from full service carriers such as Delta and United on airlines such as Frontier and Spirit they’ve gone after higher-spending travelers with perks like more space on board.
“We’re constantly thinking about what we can do to continue to increase that competitive gap with premium products, from improving the food we serve on our planes to improving our loyalty program, improving our Wi-Fi product and especially improving our Polaris product in the international first place,” United CFO Mike Leskinen said at the Morgan Stanley conference on Thursday.
US airlines have also slowed, if not stopped hiring this year, as planes arrive slowly from Boeing and Airbus and demand moderates after a huge hiring spree.
