Unit revenue pressure could linger beyond 1Q2015 for US airlines as capacity creeps up

The first quarter of 2015 is shaping up to be choppy for the three major US global network airlines, driven by currency fluctuation, some overcapacity, and for Delta, a reworking of its hedge scheme in light of lower fuel costs.

Those airlines are sticking to previous unit revenue performance estimates for 1Q2015, with the exception of Delta, which has slightly lowered guidance to reflect foreign exchange rate headwinds and the lifting of fuel surcharges in certain international markets.

Overall American, Delta and United believe that underlying demand remains strong; but higher capacity in some regions is outstripping that demand, creating some challenges in the short term. American in particular believes the US domestic market should improve in 2016 as the aircraft upgauge undertaken by nearly every domestic airline begins to taper off.