U.S. airlines could lose $130-$190-mln revenue per day due to blizzard

 @Gooch700
on December 27 2010 9:13 PM
Passengers stranded at JFK International Airport wait for the airport to reopen in New York
Passengers stranded at JFK International Airport wait for the airport to reopen in New York Reuters

Thousands of holiday travelers have been stranded at east coast airports as a savage a winter storm has cancelled hundreds of flights. Two major airports in the New York City metropolitan area, John F. Kennedy International Airport in Queens, NY and Newark Liberty International Airport in New Jersey are not expected to reopen until Monday evening at 6 p.m.

Speaking on CNBC Basili Alukos, an equity analyst at Morningstar, estimates that U.S. airlines may lose between $130-million and $190-million of revenues per day, however these figures, he adds, are somewhat misleading since passengers who are unable to board a flight today will likely book passages in a day or two.

Alukos noted that in a best case scenario, the total accrual revenue loss for U.S. airlines as a result of the blizzard could range from $400 million to $600-million. In his worst case scenario, carries could incur total accrual revenue loss of between $900-million and $1.3-billion.

Michael Boyd, an aviation analyst at The Boyd Group, indicated that weather-related cancellations are normal for airlines and the industry prepares for and anticipates such events. Thus, adverse weather typically has no long-term impact on airline stocks.

Indeed, the volcanic ash in Iceland from last spring disrupted hundreds of flights by major European and British airliners, but they have survived.

“We are in a rare moment in history where airlines are very well managed and [they are] controlling capacity,” Boyd said.

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