Delta Air Lines Inc expects to lose US$25 million in revenue this month from the partial US government shutdown that is also creating checkpoint delays and long lines at the airline’s Atlanta, Georgia, hub.
Delta’s revenue is more than US$3 billion a month, so the setback is not huge, and airline executives said overall travel demand remains healthy.
Still, it contributed to a tepid forecast of first-quarter profit.
Photo: AFP
The shutdown has grounded many government employees and contractors who regularly fly on Delta. On top of that, most federal aviation inspectors have been furloughed, which is hindering Delta’s ability to add new planes to the fleet, because the jets must first be certified by those inspectors.
“But it’s our customers who are seeing the biggest impact, with longer lines at airport security,” CEO Ed Bastian said on Tuesday on a call with analysts and reporters.
The US Transportation Security Administration initially said that 7.6 percent of its airport screeners missed work on Monday, but it later revised the number down to 6.8 percent.
That was still well more than double the 2.5 percent absent rate on the comparable Monday in January last year.
With fewer screeners on the job, it took passengers at Atlanta’s airport more than an hour to get through security during peak periods. Airports in Miami, Florida, and Houston, Texas, have closed checkpoints to consolidate screeners at remaining checkpoints.
Bastian said delays were limited to a few airports, not across its system, and that flights were running on time.
Bastian made the comments as the company announced that it earned US$1.02 billion in the final quarter of last year, up from US$299 million a year earlier on a 5 percent boost in revenue, lower income taxes and a gain from investments.
At US$1.30 per share excluding special items, the results slightly beat Wall Street expectations.
However, the airline issued a lukewarm outlook for January-to-March earnings — between US$0.70 and US$0.90 per share, compared with the mean forecast of US$0.93 per share among analysts surveyed by FactSet.
Behind that forecast is weaker revenue growth, which Delta blamed partly on the government shutdown. The airline said that unit revenue would be flat to up 2 percent in the first quarter, compared with 3.2 percent in the final three months of last year.
US airlines have been become consistently profitable in recent years, helped by mergers, cheaper fuel at times, and more revenue from extra fees. However, no one knows how they would hold up during a recession, when lucrative business travel would likely slow down.
Delta president Ed Hauenstein said that with rising fares for leisure travel and falling prices for corporate customers, the gap between the two has never been smaller.
“That should make the whole industry less cyclical,” he said.
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