Delta aims for positive PRASM starting in 2H2016. United aims to mitigate weakness in Houston

US airlines enjoyed huge top-line benefits in 2015 from plummeting fuel prices. But the decline in energy costs affected the pricing environment, which sent yields spiralling down during the year. The resulting pressure on passenger unit revenues (PRASM) overshadowed the record profitability of US airlines as investors became concerned about the duration of PRASM declines.

At one point, some airlines believed, the industry could begin a positive PRASM trajectory in 2H2016, and Delta believes unit revenue trends should stabilise by the summer of 2016. Both Delta and rival United continue to cite yield pressure rather than a deterioration of demand as one driver of their projected PRASM declines for 1Q2016. Fuel remains a wildcard for US airlines as they work to determine when they can achieve positive PRASM results; some forecasts indicate oil prices could drop an additional 15% to 20%.

Delta's projected 1Q2016 passenger unit revenue performance, while still negative, is better than United's PRASM forecast for the quarter. United is facing challenges at its Houston Intercontinental hub, which is enduring pressure from a fall-off in corporate demand from the energy sector.