United Airlines stated it expects unit revenue (per ASM) to increase by 26%-27% in 2Q2010, following a 19% year-on-year increase in 1Q2010 (Reuters, 14-Jun-2010). Capacity (ASKs) in the second quarter is expected to increase 0.9% on a consolidated basis, after previously (in late Apr-2010) forecasting a capacity increase of up to 1.3% in the quarter. The carrier added that it expects to end 2Q2010 with an unrestricted cash balance of approximately USD4.8 billion.
United expects 26%-27% increase in 2Q2010 unit revenue
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United, Delta, American Airlines: Cost creep, rising oil prices put pressure on the Big 3 to deliver
For the large three global US network airlines – American, Delta and United – the final quarter of 2016 offers some hope of negative unit revenue trends starting to stabilise, a welcome sign after two years of declines. But those positive developments are occurring against a backdrop of rising fuel costs and overall cost creep for those airlines, as labour expenses rise in the face of new collective bargaining agreements they have achieved.
Although each airline has offered a nuanced interpretation of domestic trends, the general consensus is that dynamics began to improve in Aug-2016 as close-in yields started to strengthen. After enduring tough conditions in Latin America driven by Brazil’s recession, American and Delta posted positive passenger unit revenues (PRASM) in their Latin entities in 3Q2016, and expect further improvement. Higher industry capacity is creating challenges for those airlines in the Atlantic and Pacific, but generally it seems that the path of unit revenue declines in those regions should moderate progressively.
Delta is aiming to post positive PRASM early in 2017, and American believes it can reach a positive result in total unit revenues in 1H2017. For now United is not offering a specific time period for a reversal of negative PRASM, but feels confident it is heading in the right direction, given the changing dynamics in certain areas of its network.
Hawaiian Airlines emerges as the unit revenue champion among US airlines in 1H2016
Hawaiian Airlines’ unique geography continues to benefit the company in 2016 as favourable capacity trends are one factor in its industry outperformance in unit revenue metrics. Hawaiian’s outlook for the remainder of 2016 remains positive as industry capacity on its routes to North America and long haul destinations remains relatively benign.
The airline is acknowledging slight pressure in its inter-island operations due to heightened competition with the smaller operator Island Air. Hawaiian plans to adjust its inter-island schedule later in 2016 to maximise peak flying and cut some off-peak flights.
Hawaiian is expanding service to the Tokyo market in 2016 after being awarded new slots at Haneda airport. But the expansion is not affecting Hawaiian’s overall growth targets of a 2.5% to 5.5% increase in capacity, which is significantly lower than the double-digit expansion it recorded from 2011 to 2013.