Delta Air Lines and US Airways
separately cited the U.S. federal budget sequester—automatic budget cuts that
went into effect March 1—for fewer "close-in" bookings during March, which
pushed each carrier's March unit revenue lower than they expected.
Delta's consolidated passenger
unit revenue in March increased 2 percent year over year, and US Airways' was flat.
According to a March 26 research
note issued by analyst Daniel McKenzie of The Buckingham Research Group, US Airways
"may be the most impacted by a sequester given its exposure to Washington,
D.C. (at Reagan National Airport)," a situation that he wrote could be mitigated
by merging with American Airlines and operating a much larger and more diverse network.
McKenzie added that the budget
sequester generally "remains a wild card and thus a demand risk. Security delays
from budget cuts at the Federal Aviation Administration and the Transportation Security
Administration likely [will] impact bookings at some point."
In a subsequent note issued
today, McKenzie noted that shares of Delta had traded lower this week "on general
demand worries tied in part to the sequester."
Meanwhile, McKenzie noted
that "capacity has come out of the industry and is mostly staying out. At the
system level, 2Q13 capacity rises 0.6 percent year over year for the U.S. airlines
and 0.7 percent in 3Q13. However, versus in 2007, the last year of industry profitability
in the last cycle, the industry is still 9 percent smaller this summer. Said differently,
despite aggressive growth by JetBlue, Spirit and Virgin, there are still 21 million
fewer seats available for sale in global distribution systems domestically versus
For March 2013, Delta's domestic
U.S. traffic edged down 0.1 percent and capacity increased 1.6 percent, while US
Airways posted a 5.9 percent increase in domestic U.S. traffic versus March 2012
and a 5 percent increase in domestic U.S. capacity.
Alaska Airlines also reported
March operational data, with total combined traffic increasing 9 percent on an 8.7
percent capacity bump. Other major U.S. carriers are expected to report March traffic
statistics in the coming days.