Airlines' canceled flights mean lost revenue, lower costs

Storms that grounded hundreds of flights on the East Coast and upper Midwest in the last week will hit airlines' bottom line.

Just how much is the question.

Airlines could be hurt by costs for overtime, deicing, rebooking tickets, getting planes to airports to resume service, displaced crew, and stranded passengers.

But they saved on fuel, some salaries, and airport landing fees.

While travel disruptions were the worst the industry has seen since the 2001 plane hijackings, the true impact of the storms may not be disclosed until airlines report first-quarter earnings.

Helane Becker, analyst with Jesup & Lamont Securities, of New York, predicted the storms would have a negligible effect. "The bottom line is: They saved money in some areas, and, yes, it cost them revenue."

The weather may have cost airlines a penny or 2 cents a share, Becker said. But analysts normally build 2 or 3 cents a share into earnings models for weather in the first quarter, she said.

"I've talked to every airline, and nobody expects it to be a bigger number than a few cents a share," Becker said. "Southwest just told me, 'It's a minimal impact. We don't really have a number. We just don't think it's a big number.' "

Because airlines canceled a lot of flights well ahead of time, passengers were not stranded. The days of the storms - Saturday, Tuesday and Wednesday - are typically the lowest passenger volume days of the week, she said. With flights canceled in advance, planes were never out of position.

"Where it really gets costly is when they fly a plane into Philadelphia, and it starts to snow, and then they have to deice and all of a sudden everything gets backed up. So you wind up with two- to four-hour delays," Becker said.

U.S. airlines canceled 13,000 flights affecting nearly one million passengers from last Friday through Feb. 10, said the Air Transport Association of America.

"Certainly there will be a financial impact, the magnitude I don't know," said David Castelveter, a spokesman for the airline trade group.

Snow is usually a onetime event, and airlines "dig out and recover." But the storms in the Mid-Atlantic were multiple and significant, he said.

"Airplanes make money when they fly, not when they sit on the ground," Castelveter said. "The revenue lost is greater than the fuel saved by not flying."

When flights are canceled, airlines lose ticket revenue if passengers decide not to take the trip. When passengers do rebook their flights, they take seats that might have been sold to someone else.

US Airways Group Inc., Philadelphia's dominant airline, canceled 1,527 "mainline" jet flights and 4,284 commuter flights between Jan. 29 and yesterday. US Airways has 3,000 scheduled departures a day.

Southwest Airlines Co., Philadelphia's second-busiest carrier, grounded 2,732 flights across its system since last Friday. Southwest averages 3,100 daily nonstop flights.

"Since Feb. 5, we've had the highest number of flights canceled due to weather in a seven-day period in our history," said spokesman Paul Flaningan.

Continental Airlines Inc. canceled 918 flights Wednesday alone, out of 2,500 average daily departures.

American Airlines canceled 815 of 3,400 flights yesterday.

Delta Air Lines Inc., the world's largest airline, canceled 3,000 flights between last Friday and yesterday. Delta operates 5,900 flights a day.

United Airlines grounded 290 out of 3,300 flights yesterday, 600 flights Wednesday, and 800 Tuesday.

"Where United operates, i.e. Chicago and Denver, our first and second largest hubs, those are snowbound regions," said spokeswoman Robin Urbanski. "So we are accustomed to this type of weather. It's nothing that new for us."