Airlines Warn FAA Furloughs Eating Into April Earnings
While the first quarter of the year is usually slow for travel, Delta and US Airways both reported profits today that beat expectations, as they did better at filling seats and having customers pay more for flights. But airlines are expecting bad news for April.
Delta said it had a net profit of $85 million, the first time it’s been in the black in the first quarter since 2000. Sales also increased by 1 percent. But for April, Delta expects a 2 percent to 3 percent decline in passenger revenue per available seat mile—a measure of demand and a key metric for airlines. US Airways complained that airline travel already began tapering off in March because of the budget cuts, which hurt demand for last-minute travel.
Part of the problem is the so-called “sequestration”—mandatory government budget cuts that took effect March 1 after Congress and president Barack Obama failed to agree on a budget deal. The cutbacks have put air traffic controllers on obligatory furloughs, reduced the number of controllers working at a given time. That’s already resulted in hundreds of canceled flights in the last few days. The US Federal Aviation Administration said last week that passengers could expect delays of more than two hours. In another blow to the airlines, the government also cut back on travel for its employees.