Delta Air Lines

THE number of empty seats on planes flown by US airlines is rising this year despite aggressive fare sales and capacity cuts, darkening the outlook for industry earnings in the first quarter and beyond.

Airline data on March load factors, which measure how full an airplane is, showed a third-consecutive month of declines and the largest drop for some carriers this year.

“We’re seeing some real good fare-sale activity, but load factors are still dropping,” said Jim Corridore, airline analyst with Standard & Poor’s Equity Research. The airline industry has been battered since last year by economic recession that has eroded travel budgets. Carriers have fought back with sweeping capacity cuts and fare sales designed to generate spring and summer travel.

But March traffic data show that despite carriers’ best efforts to stoke demand, the decline in load factors is accelerating.

Delta Air Lines Inc, the world’s largest carrier, saw its March load factor drop 4.4 percentage points to 80.5%, following a 2.7-point dip in February. The carrier’s capacity was down 7.9% in the month.

AMR Corp’s American Airlines saw its load factor slump 4.8 points to 79.2% as capacity fell 5.6%. In February, the carrier’s load factor declined 2.9 points.

Declining load factors will hurt first quarter results, which airlines will begin posting this week, said Morningstar equity analyst Basili Alukos. “They’re having fewer people in the planes, so it means you’re going to have way lower earnings.”

Analysts expect losses from top carriers in the first quarter, according to Reuters Knowledge. The consensus forecast for Delta calls for a US$1-per-share loss. AMR is seen losing US$1.48 per share, while the loss at UAL Corp, parent of United, is estimated at US$4.49 per share. — Reuters

Source: http://thestar.com.my/maritime/story.asp?file=/2009/4/13/maritime/3683984&sec=maritime, 13 April 2009

Facts
1) Delta's Atlanta hub is the busiest airline hub in the world
2) On October 29, 2008, Delta closed its merger with Northwest Airlines to form the world's largest commercial carrier