Airlines are reducing their expansion plans, resulting in an increase in flight costs.

Airlines are reducing their expansion plans, resulting in an increase in flight costs.
Airlines are reducing their expansion plans, resulting in an increase in flight costs.
  • Airlines are raising their unit revenue forecasts for the third quarter.
  • Flights are getting more expensive again, according to the latest inflation report.
  • After a surge in flights caused fares to decrease, carriers have been regulating their capacity growth.

Airlines are experiencing higher unit revenues towards the end of summer, indicating that passengers will need to pay more for flights in the upcoming months.

On Thursday, the company raised its third-quarter profit forecast to a range of $2.15 to $2.25 per share from a previous outlook of no more than $1.60 per share. Additionally, it announced that it expects unit revenue to increase by as much as 2%, which is an improvement from its previous estimate of flat to "positive" unit revenue.

Delta has stated that its domestic and trans-Atlantic unit revenue will increase in September compared to the previous year, despite the outage in July, which will limit the rise in unit sales to only 1%. The airline expects a $500 million loss due to the outage and its aftermath, resulting in the cancellation of 7,000 flights.

Delta customers were more affected by the outage than those on other airlines, according to Alaska.

Although revenue has exceeded expectations, capacity remains consistent with prior projections, according to Alaska's securities filing.

On Thursday, at a Morgan Stanley conference, Delta's president, Glen Hauenstein, stated that the airline isn't experiencing any lasting effects on bookings due to the outage.

The airlines have been facing record numbers of travelers but lower fares and weaker-than-expected pricing power. However, this seems to be changing.

In August, the airfare price index increased by 3.9% following five straight months of decreases, as indicated by Wednesday's U.S. inflation report.

On Wednesday, announced that it might break even this quarter, on an adjusted basis, after a previous forecast of margins ranging from -3% to -6%, after it moderated capacity. Last week, raised its unit revenue growth forecast for the current quarter because of higher demand and a benefit from the "re-accommodation of customers affected by other airlines' cancellations due to technology outages in July."

This year, U.S. airlines have slowed or halted hiring altogether due to delayed aircraft deliveries from Boeing and Airbus, as well as moderating demand after a previous hiring spree.

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by Leslie Josephs

Business News