The Trader Harbor
  • Business
  • Politics
  • World News
  • Stocks
  • Business
  • Politics
  • World News
  • Stocks

The Trader Harbor

Business

U.S. airlines cut growth plans in a bid to stem profit-eating fare discounts

by admin July 31, 2024
July 31, 2024
U.S. airlines cut growth plans in a bid to stem profit-eating fare discounts

U.S. airlines are reducing their capacity through the end of the year in a bid to cool an oversupplied domestic market that has led to lower fares and reduced profits despite strong summer travel demand. For passengers, that could mean higher fares are on the way.

Over the last week, U.S. airlines had “one of the industry’s largest week-over-week capacity reductions,” shaving almost 1% off of their capacity planned for the fourth quarter, Deutsche Bank said in a note Sunday. Airlines now expect to grow flying about 4% year over year during the final three months of the year.

“Despite the sizeable overall reduction, we expect to see further cuts in the weeks ahead as carriers are expected to continue to refine their schedules,” Deutsche Bank airline analyst Michael Linenberg wrote in the note.

U.S. airline executives have noted strong demand but a domestic market that’s awash in flights, forcing them to dial back growth plans, which could drive up fares. The latest U.S. inflation report earlier this month showed airfare in June fell 5.1% from a year earlier and 5.7% from May.

Reducing capacity could drive up fares for consumers and boost airlines’ bottom lines, if travel demand holds up. Getting fares in the market that are profitable to airlines but palatable to consumers is crucial for the industry as consumers have pulled back on spending in other areas.

Third-quarter outlooks from Delta and United earlier this month disappointed investors, but their CEOs said they expected capacity pullbacks across the U.S. industry to materialize in August, helping results. Southwest Airlines forecast a potential drop in third-quarter unit revenue, a measure of how much money an airline brings in for the amount it’s flying. The airline said last week it will finally ditch its iconic open-seating model and introduce extra-legroom seats to drive up revenue.

American Airlines on Thursday reported a 46% decline in its second-quarter profit and said it plans to dial back its capacity growth in the coming months, expanding less than 1% in September over last year.

“That excess capacity led to a higher level of discounting activity in the quarter than we had anticipated,” CEO Robert Isom said on an earnings call last week. Overall, American plans to grow 3.5% in the second half of the year after expanding about 8% in the first six months of the year.

Low-cost and discount airlines have been more aggressive in cutting unprofitable routes and scaling back capacity. Those carriers plan to contract 2.2% in the fourth quarter from the same period of 2023, Deutsche Bank said.

JetBlue Airways, for example, has culled money-losing routes this year and deployed aircraft to more popular city pairs. The carrier is scheduled to report results before the market opens on Tuesday.

Spirit Airlines, meanwhile, warned of a wider-than-expected loss for the second quarter after nonticket revenue, which accounts for fees like checked bags and seating assignments, came in lighter than expected.

This post appeared first on NBC NEWS

0
FacebookTwitterGoogle +Pinterest
previous post
The housing crunch is still squeezing buyers — but not as badly in these swing-state counties
next post
AT&T, other phone companies sued over stolen nude images could face liability after court ruling

Related Posts

Target rolls back DEI initiatives, the latest big...

January 25, 2025

How Vuori reached a $5.5 billion valuation by...

December 20, 2024

Tesla’s robotaxi launch in tech-friendly Austin has Musk...

June 4, 2025

Sports executive charged with bid-rigging in Texas arena...

July 11, 2025

IRS plans to pay 1 million taxpayers up...

December 25, 2024

Starbucks moves to the next phase in its...

June 17, 2025

Harvard’s battle with the Trump administration is creating...

April 19, 2025

Volkswagen braces for showdown with unions after warning...

September 4, 2024

The lunch rush is dead as Americans live...

May 20, 2024

Disney rolls out line-skipping park passes costing up...

October 18, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • Microsoft’s Satya Nadella says job cuts have been ‘weighing heavily’ on him

      July 26, 2025
    • FCC greenlights Paramount’s $8 billion merger with entertainment group Skydance

      July 26, 2025
    • The Real Drivers of This Market: AI, Semis & Robotics

      July 26, 2025
    • S&P 500 Breaking Out Again: What This Means for Your Portfolio

      July 26, 2025
    • Chart Mania – 23 ATR Move in QQQ – Metals Lead 2025 – XLV Oversold – XLU Breakout – ITB Moment of Truth

      July 26, 2025
    • Trump says SCOTUS immunity ruling likely helps Obama in light of Gabbard, DNI findings

      July 26, 2025

    Categories

    • Business (1,309)
    • Politics (4,090)
    • Stocks (1,547)
    • Uncategorized (45)
    • World News (1,302)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: TheTraderHarbor, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 thetraderharbor.com | All Rights Reserved