Updated 1:25 p.m. ET
(Bloomberg) -- United Continental Holdings Inc. is likely to take at least a $265 million financial hit from Hurricane Harvey because of the carrier’s reliance on Houston as one of its biggest hubs, an airline analyst said.
The third-largest U.S. carrier’s seat count will fall an estimated 1.5% in the current quarter because of the storm, with little opportunity to recoup lost sales, Helane Becker of Cowen & Co. said in a report Tuesday. Houston’s George Bush Intercontinental Airport is one of United’s largest hubs, accounting for about 17% of the airline’s capacity.
Related: Next wave: Harvey threatens Louisiana with flooding after crippling Houston
|More troubling than Hurricane Ike in 2008
The projected losses would more than double the $125 million blow Delta Air Lines Inc. suffered when it canceled about 4,000 flights after April storms in Atlanta. Harvey will probably also prove more troubling than Hurricane Ike in 2008, which cost Continental Airlines $50 million two years before it merged with United, Becker said.
Harvey “seems more powerful and impactful,” she said in her note. Sandy, the storm that hit New York in 2012, “is probably the best comp, given the impact lingered beyond just the initial airport closings. After the airports opened, there was rebuilding to be done, and people just didn’t travel for a while.”
United hasn’t issued guidance to investors about the storm’s impact yet, according to the airline.
“Our focus right now is on resuming operations out of Houston and helping our customers and employees,” said United spokeswoman Megan McCarthy.
United fell less than 1% to $62.99 at 10:57 a.m. in New York after a similar drop Monday. The shares tumbled 13% this year through Monday, more than twice the decline of Delta and three times the slide of American Airlines Group Inc.
|Southwest & Spirit Airlines
Southwest Airlines Co. will probably take a $77 million hit in the third quarter because of its major presence at Houston’s William P. Hobby airport, Becker said. Discounter Spirit Airlines Inc. is in line for $11 million in storm-related losses, she said.
The total blow adds up to $353 million for the three airlines, assuming the airports reopen Aug. 31. Intercontinental is expected be reopen no sooner than the middle of that day, while Hobby may reopen Wednesday, according to the Federal Aviation Administration.
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
