Harvey, which wreaked havoc on Houston – America’s fourth-largest city – with heavy rainfall has negatively impacted airline operations causing multiple flight cancellations. In fact, air travel was hurt with two Houston airports, George Bush Intercontinental Airport (IAH) and William P. Hobby Airport (HOU), reportedly remaining closed for a few days (since the noon of Aug 27) due to Harvey-induced heavy rainfall. The airports are, however, currently operational.
Bleak Third-Quarter Forecasts
The picture pertaining to the extent of impact on sector participants is becoming clearer with many of them unveiling fresh forecasts for the third quarter of 2017. As was widely expected, United Continental Holdings UAL , the parent company of United Airlines, has been the worst hit as Houston is the carrier’s second-largest hub. In fact, more than 7,400 flights were cancelled at IAH, with operations suspended at the airport due to the unprecedented storm, for more than four days.
The company trimmed its views with respect to pre-tax margin and passenger revenue per available seat mile (PRASM: a key measure of unit revenue) for the current quarter mainly due to Harvey at the Cowen and Company Global Transportation Conference. This Zacks Rank #3 (Hold) carrier now expects PRASM to decline between 3% and 5% year over year (the earlier guidance provided in July had called for the metric to be in the range of+1% to – 1%).In fact, Harvey has impacted the current-quarter PRASM to the tune of approximately 150 basis points…
