Sequestration 2013 Furloughs Sees Flight Delays, Cancelations And Major Revenue Losses

  on

As the infamous sequester continues to loom over airports across the country, flight cancelations and delays plague some of the East Coast’s busiest hubs for the second day in a row.

Early-morning flights were reportedly delayed across the board as of 8:45 a.m. Tuesday at New York’s LaGuardia and John F. Kennedy International Airport, according to the Federal Aviation Administration. The interruptions mark the second day of delays as a lack of staff caused controllers to fall behind by mid-Tuesday morning.

“Unfortunately, delays and cancelations due to FAA furloughs are occurring,” JetBlue Airways (Nasdaq: JBLU) spokesperson Allison Steinberg said in an emailed statement. “We’re working to minimize any inconvenience as a result of sequestration and recommend customers regularly check the status of their flights.”

Federal officials estimate that about a third of all passengers will face delays, with up to 6,700 flights arriving late at more than a dozen major airports each day.

“It will not be very long until the system comes to a grinding halt, much like you see with a severe weather event,” Head of Air Line Pilots Association Lee Moak told the Washington Post. “It would be like having Hurricane Sandy in the north and Hurricane Katrina in the south at the same time. The air system is not a light switch. Once it starts, it takes days and days to recover.”

Delta Air Lines (NYSE: DAL), which operates more than 5,000 flights a day and has approximately 80,000 employees, is the first airline to report its revenue has been affected as a result of the sequester, as the Atlanta-based carrier said government spending cuts and weak demand from vacationers are hurting profits this month.

“We are taking actions to mitigate the decline in close-in demand we saw in the last part of March, and we expect the impact of the sequester, combined with a softening of leisure demand, to result in a 2 – 3 percent decline in April’s unit revenues,” Delta President Ed Bastian said in a statement.

The world's second-biggest airline earned $7 million, or a penny per share, for the quarter that ended March 31. Not counting special items, it would have earned $85 million, or 10 cents per share—better than analysts had been expecting. The company reported net income of $124 million in the year-ago quarter, but excluding special items it lost $39 million, or 5 cents per share. Revenue rose 1 percent to $8.5 billion, matching analyst expectations.

The U.S. Court of Appeals for the District of Columbia on Monday denied an airline industry request for a stay of the furloughs. The court set a May 22 deadline for the industry group, Airlines for America, and the FAA to make arguments in the suit filed Friday.

 

 

Join the Discussion