Airline’s Sandy Losses at $190 Million

Lost-revenue figures from airlines affected by Superstorm Sandy are coming in and analysts are estimating the grand tally on the most affected airlines—American, Delta, JetBlue, US Airways, Southwest, Spirit and United—to be $190 million.

United Airlines, the world’s largest airline, says the ugly weather pelted them to the tune of $90 million after cancelling almost 5,300 flights, representing a quarter of all the flight cancellations related to Sandy. For the month of October, United reports profit fell $35 million. Delta’s profit fell $20 million as a result of Sandy, with October revenue dropping by $45 million.

The recent winter storm in the New York area, which caused United to cancel flights in all three of New York’s major airports, will affect the November balance sheet.

But all is not lost. After the storm, both airlines increased per-passenger revenue due to increased efficiency resulting from rescheduled trips putting more passengers on flights. (Analysts say only 70 percent of passengers with cancelled flights rebook.) Cancelled flights also mean you don’t burn jet fuel or pay crews.

So let’s look at some loss-revenue numbers from the recent mother-of-all flight interrupters—the April 2010 Iceland volcano and its spewing ash.

Back then, ABC News reported that the engine-damaging ash was costing airlines worldwide at least $200 million per day. The affect on US carriers alone was $20 million per day according to CNN. CBS News reported, “Every international flight bound for the U.S. is worth an average of $450,000 in spending from travelers.”

Those are huge numbers.

Airline confusion surrounding flight cancellations are a common theme among FT members. Which gets me thinking about weather and the many ways weather influences flight.

Here’s a random list of how weather affects the bottom line:

  • To deice or not to deice.
  • Plowing and treating runways.
  • Lightning can prevent ground crews from refueling aircraft, resulting in delays.
  • Cloud ceilings and other visibility issues often result in traffic control slowing approaching aircraft.
  • Wind speeds may dictate greater aircraft spacing on takeoffs.
  • Wind shear can cancel takeoffs and landings.
  • Jetstream and temperatures impact fuel consumption.
  • Thunderstorms and ash, even dust storms, result in re-routing and burning more fuel.
  • A diverted or cancelled flight can result in as many as 50 flight delays.
  • Monthly fees alone for weather data cost an airline $6,000 per month.
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