Assessing Sandy's Cost: Delta - $20M in October; Airlines - Maybe $190M
Meanwhile, Wolfe Trahan analyst Hunter Keay estimated the hurricane's total impact on earnings before interest and taxes at the seven most affected airlines to be $190 million.
Delta said its October revenue was reduced by approximately $45 million, as it cancelled more than 3,500 flights due to Sandy. The carrier said it is still assessing the November impact "but expects it to be less than October." Keay's estimate for Delta's total EBIT loss is $50 million.
During the month, Delta's passenger revenue per available seat mile improved by 5.5%, due primarily to corporate revenue gains and continued capacity discipline. The improvement was about one point higher than it would have been without the hurricane impact, Delta said, because the month's revenue was spread over fewer flights.Delta expects to operate a full schedule at New York's three airports Friday. On Thursday, it operated nearly full schedules at New York Kennedy and Newark and 80% of its scheduled flights at LaGuardia. Despite the storm's impact, Delta completed 98% of its flights in October and 85.5% of those flights arrived on time. Capacity declined 1.8% for the month. Regional jet operations, which absorbed the highest percentage of hurricane cancellations, showed a 7.5% domestic capacity decline and a 29.2% international decline. Trans-Atlantic capacity declined by 6.9% during the month. In a report issued Friday, Keay said, "It seems highly likely that Hurricane Sandy will have a material negative impact on 4Q earnings, but the impact to stock prices should be about neutral." In particular, Keay, said, US Airways' (LCC) "forecast of profitability might not hold up given that airline's exposure to LGA, DCA, and PHL (including lucrative shuttle traffic)." Keay's estimates for Sandy's EBIT impact by airline are: American (AAMRQ.PK), $30 million; Delta, $50 million; JetBlue (JBLU), $20 million; US Airways, $30 million; Southwest (LUV), $10 million, Spirit (SAVE), $5 million and United (UAL), $45 million. In general, the airlines may have managed Hurricane Sandy as well as they have ever managed a weather disruption, broadly implementing change fee waivers and early cancellations that enabled them to better prepare passengers and better position aircraft for service resumptions.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV