US Airline Cuts Capacity Due to Soaring Fuel Costs After Ukraine Crisis

Major US airlines cut their capacity forecasts for the first quarter of 2022 due to higher fuel costs due to the Ukraine crisis, removing some of the benefits of recovering travel demand.

The price of oil, a major cost component for US airlines already facing high labor costs, has soared since Russia invaded Ukraine, drawing a series of sanctions from the US and other countries.

Delta Air Lines and United Airlines Holdings, which do not hedge against fluctuations in oil prices, face the additional problem of having to take longer routes to several Asian countries to avoid Russian airspace.

Both airlines, along with JetBlue Airways, lowered their capacity expectations.

Delta said it expects first-quarter capacity to be around 83% of pre-pandemic levels, at the lower end of its previous estimate of 83% to 85%.

Read: Australia and Netherlands sue Russia over MH17 Crash in Ukraine

United expects capacity to fall around 19% compared to its previous estimate of between 16% and 18%.

JetBlue expects capacity to fall about 1%, below its previous forecast.

However, all three airlines raised their revenue expectations and maintained that demand remained strong.

Airline shares were up between 2% and 4% in premarket trading, as oil prices fell to below $100 for the first time in two weeks.

Delta said it expects first-quarter adjusted earnings to be around 78% of pre-pandemic levels, compared with the 72 percent to 76% previously estimated.

Southwest Airlines Co said it expects revenue to fall 8% to 10%, better than its previous forecast of a 10% to 15% decline.

Read: Here are 3 Types of Chinese Assistance Allegedly for Russia's Invasion of Ukraine

United Airlines Holdings Inc. said it expects its first-quarter operating income decline to come to a "better" end than its previous forecast of a 20% and 25% decline, compared to pre-pandemic levels.

Subscribe Daily Post or Follow Google News to update information quickly, Thank you..!!