American Airlines Expects Irma will be Short-Term Blip on Revenues -

American Airlines Expects Irma will be Short-Term Blip on Revenues

Credit: skift.com

  • About: 9 days ago
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A screen at Miami International Airport listed flight cancelations last week. American Airlines, the largest airline there, is beginning to ramp up flights.



Skift Take: Airlines might have some trouble in the Caribbean longer term, but Florida should bounce back relatively quickly. That's good news for American and other U.S. airlines.

— Brian Sumers

American Airlines, one of the strongest U.S carriers in Florida and the Caribbean, calculates it will take a short-term revenue hit from Hurricane Irma but expects business soon will return, CEO Doug Parker said Wednesday at an industry conference.

American reopened its Miami hub Tuesday, and so far it has prioritized flying to its other hubs, where passengers hop on another plane to their destination. By Saturday or Sunday, Parker said, American should fly its usual schedule of about 340 departures. That’s more than any other airline operates from any Florida airport.

In the short term, American will lose revenue because of the storm. American said Tuesday it had canceled more than 5,000 flights from 40 airports because of Irma, and warned it would report less revenue for the third quarter than expected. As a result, American predicted it would generate quarterly pre-tax margin between 8.5 percent and 10.5 percent, less than its earlier estimate of between 10 percent and 12 percent.

While some areas of Florida and the Caribbean may not recover so quickly, Parker said Wednesday at the Airlines for America Commercial Aviation Industry Summit that Irma should not create long-term revenue problems.

“We don’t anticipate any financial impact three or four or five months from now,” Parker said at the event in Washington, D.C. “We have a near-term impact, but Miami is back open for business. The tourists will return.”

Elsewhere, tourists might not come back so quickly, but Parker said he is not concerned.

“Places like St. Maarten obviously are not going to be able to take tourists for awhile,” he said. “What tends to happen in those cases is customers will need to rebook, but they don’t just cancel their vacation. They have to go somewhere. We help them to do that.”

Already, American has returned to most Florida airports, but is still not flying from many in the Caribbean. However, it said Wednesday it plans to reopen operations at 13 Caribbean airports on Friday and Saturday, including St. Croix, St. Thomas, St. Maarten and St. Thomas.

Southwest Still Recovering From Harvey

Speaking on stage with Parker, Southwest CEO Gary Kelly suggested he worries demand might not return quickly, but said his company can withstand any longer-term impact.

“Absolutely, we worry about that,” he said. “There’s a blow, and we’re going to absorb it.”

He noted that while Houston Hobby Airport — one of Southwest’s biggest stations — has reopened after Hurricane Harvey, the airline is seeing fewer passengers booking to and from the airport than before. “Bookings take a hit,” he said.

He said Southwest is expecting to lose $40-60 million because of Hurricane Harvey. “Irma is going to be something in that order of magnitude, I’m assuming,” he said. “We’ll get through that.”

A spokesman for Southwest said the airline is operating from all Florida airports except Fort Myers, though it continues to cancel some flights from Orlando and Tampa. The airline expects to resume Fort Myers operations on Thursday, the spokesman said.

Most airlines restarting flights

Other airlines are also resuming most operations. Delta Air Lines said it resumed flying at many larger Florida airports on Tuesday, though it said flying from several airports, including Key West, Florida and St. Thomas, “… will continue to be evaluated for the safe resumption of service when possible.” Most importantly, Delta’s massive hub in Atlanta is operating normally.

Meanwhile, JetBlue said Wednesday it had resumed operations at most airports, except for St. Maarten, St. Thomas, and Santa Clara, in Cuba. Like other airlines, however, it was operating a limited schedule at many airports.

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