Flights Grounded, but Airlines Seen Weathering Storm

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Thousands of airline flights to and from the east coast of the United States have been grounded as a result of Hurricane Sandy, which threatens to be one of the worst ever to hit the East Coast.

JetBlue Airways, which has a major hub at Kennedy Airport in Queens, New York, has canceled more than 1,000 flights from Sunday through Wednesday, and United Airlines, with a major hub in Newark, New Jersey, has grounded 3,700 flights, or about 16% of those scheduled, during that same period.

American Airlines and its commuter line American Eagle have canceled over 1,500 flights from Sunday night until midday Wednesday and says there may be additional delays and cancellations depending on the aftermath of Hurricane Sandy. Customers whose flights were canceled but bought their tickets before October 27 won't be charged extra if they reschedule to travel no later than Nov. 7.

Flights Grounded, but Airlines Seen Weathering Storm
Bloomberg | Getty Images

Delta and all other airlines with flights scheduled to depart or leave airports along the East Coast have also canceled flights.

Analysts don't expect the storm to have a lasting impact on airlines, however, fourth quarter earnings could feel a pinch.

"We do not expect the storm to have a sustained impact on earnings, through there is likely to be a shortfall from current 4Q12 estimates," Raymond Kames analyst Savanthi Syth writes in her report today.

"The airlines are well prepared…They've moved their assets out of harm's way," says Ray Neidl, senior equity analyst at Maxim Group.

Neidl says those moves, flying planes to airports out of the storm's path, will be the biggest storm-induced cost for the airlines.

Additionally, losses could be limited due to the fact that the storm is coming at a "soft time" in the season.

Mateo Lleras, manager of corporate communications at JetBlue, says the airline is not yet in a position to discuss the financial impact of the storm but tells The Daily Ticker "it's worth noting that while planes don't make money on the ground, they don't cost money, either—we save on fuel and other operating costs."

If customers want to change or cancel flights, JetBlue is waving fees for travel to and from cities in the mid-Atlantic and northwest that are impacted by the storm.

According to Syth, JetBlue is among the airlines most affected by the storm, followed by United, Delta, US Airways and American. She estimates the storm could cost JetBlue $25 million pre-tax. More than 80% of its flights are along the East Coast Corridor from Washington, D.C. to Rhode Island—compared to about 48% for US Airways and between 22-28% for other major airlines. She estimates Delta will lose $45 million pre-tax.

Overall Syth says the airline industry is now much better prepared to weather big storms because they're "very disciplined about managing capacity….They're not going after market share for the sake of market share, but add only flights that make economic sense."

The full impact of Hurricane Sandy on the airlines won't be known for days.

"If the worst of the storm is by Tuesday and things start to recover Wednesday, then planes could be operational by the weekend," says Neidl.

Stay tuned.

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