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As the first carrier to announce second-quarter results last
month, Delta Air Lines gave investors a stir when it revised capacity plans
upward. Despite a profitable quarter, Delta shares promptly fell amid a 9
percent fourth-quarter available seat mile growth plan that Stifel Nicolaus
Capital Markets analyst Hunter Keay called "an unwelcome development."
Growth fears, however, abated as other carriers maintained modest growth, and
even Keay put Delta's fourth-quarter growth into perspective, noting it builds
on a fourth-quarter 2009 decline "by far the largest among the big five."
Capacity discipline remains the rallying cry for a
sustainable airline industry, and, even in the face of a pending economic
recovery, airlines are adding few new seats. Morgan Stanley analyst William
Greene expects the nine largest airlines to grow full-year 2010 capacity by
just about 1.1 percent. "Current capacity guidance suggests that the
airline industry will grow capacity more modestly than normal seasonality in
the coming months," he said.
The second half of the year holds the first en masse
year-over-year capacity increases by all major carriers in three years, as
airlines lap the supply depths of 2009's second half. There are pockets of
growth, as demonstrated by JetBlue's plan to grow full-year 2010 capacity by 7
percent and AirTran's plan to grow full-year capacity by nearly 4 percent, but
their smaller footprints compared to legacy carriers make those additions seem
like a drop in the bucket. Southwest Airlines, meanwhile, plans to keep
capacity flat this year, but see "modest" growth in 2011.
This story originally
appeared in the August 9, 2010, edition of Business Travel News.