Airlines brace for more chaos ahead of Hurricane Irma

Key Points
  • Hurricane Irma is the second major storm to threaten major hubs in a month.
  • Jet-fuel prices have surged more than 20 percent since Harvey struck Texas.
  • Storm's exact path over the U.S. still unknown.
Airlines prepare for Irma by canceling flights, waiving fees

U.S. airlines cancelled dozens of flights and prepared for more chaos as the second massive Atlantic hurricane in less than a month barreled toward the United States.

Category 5 hurricane Irma could hit Florida as early as this weekend. And following close on its heels is Jose, which was designated a hurricane Wednesday afternoon. Tropical Storm Katia also intensified and was upgraded to a hurricane by the National Hurricane Center.

Airlines had canceled thousands of flights after Hurricane Harvey left widespread flooding in its wake in southeastern Texas last month. United Airlines was hit particularly hard since it operates a hub in Houston's George W. Bush Intercontinental Airport, which was closed following the storm.

United Airlines on Wednesday said the storm cost the carrier $400 million in revenue this quarter. It lowered third-quarter unit revenue guidance, to a 3 percent to 5 percent decline on the year, down from a 1 percent decline to 1 percent gain it projected in July. It cited Harvey as well as geopolitical tensions and higher fuel prices as challenges in the three-month period.

The airline said it had canceled more 7,400 flights as a result of the storm.

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Major U.S. carriers including Delta Air Lines, American Airlines, United and Southwest are waiving change and cancellation fees and have cancelled some flights altogether to certain Caribbean airports this week.

Irma is threatening now Florida, home to American Airlines hub at Miami International Airport, where it operates frequent service to the Caribbean and Latin America, and busy Fort Lauderdale-Hollywood Airport, where Spirit, JetBlue and Delta Air Lines have a large presence.

American Airlines said it had repositioned some planes to get passengers out of some of the islands as early as possible.

United ended 1.3 percent lower at $60.33, while JetBlue lost 1.6 percent to settle at $18.85. Delta and American recovered from earlier losses, adding 3.4 percent to $47.39 and 0.9 percent to $44.31, respectively.

While it isn't clear how costly the storm would be, the busy hurricane season, one of the most severe in more than a decade, could crimp airlines' bottom lines.

Increased operational costs due to the cancellations along with higher fuel prices could mean a rough end for the third quarter, as airlines including Delta and JetBlue on Tuesday lowered quarterly guidance.

Jet-fuel prices spiked more than 20 percent after Harvey hit refining hubs in and around Houston, according to S&P Global Platts. Those higher costs remove a tailwind that have helped catapult airlines to record profits in the wake of a fuel-price slump in mid-2014.

That could mean fuel surcharges for passengers down the road, said Foster Finley, a managing director at consulting firm AlixPartners.