Hurricane Sandy affects aviation

It’s Not Just Cars, Generators — Now Jet Fuel Is Becoming A Concern

To Make Sure Inbound NYC Flights Can Return, Planes Carrying More Gas

CBS,

2 November, 2012

Fears of a jet fuel shortage at New York’s airports have led some airlines to take the unusual — and costly — step of putting extra fuel on planes.

The worries have emerged following Superstorm Sandy, which has disrupted the flow of fuel and electricity throughout the Northeast.

US Airways, United Airlines, American Airlines and Southwest Airlines are among the carriers loading more fuel on New York-bound flights. This ensures they have enough fuel to leave the New York region.

Operations at the region’s three main airports are `”still very much in flux,” said Todd Lehmacher, a spokesman with US Airways Group Inc.

However, The Port Authority of New York and New Jersey, which operates the airports, said that despite the airlines’ actions, there is “an adequate supply.”

“We have, and are receiving, fuel,” said authority spokesman Pasquale DiFulco. “We’re in good shape.”

New York’s airports were closed for several days following Sandy and more than 20,000 flights across the Northeast were canceled. By Thursday morning, all major airports in the region had re-opened. The fuel worries do not appear to be crimping flight schedules.

In fact, airlines said they are adding extra fuel to avoid further cancellations.

The actions are to “minimize the likelihood that there will be any fuel-related customer disruptions,” said Victoria Day, spokeswoman for Airlines for America, the industry’s U.S. trade group.

Bringing extra fuel on planes is not ideal. Jet fuel is the airlines’ single largest operating expense. For every few gallons of extra fuel, a plane must carry one additional gallon just to fly the added weight. Airlines typically try to put just enough fuel on their planes to reach a destination, plus a 45-minute emergency reserve.

While cross-country and international flights are already fully loaded, short flights of an hour or two usually have extra room in the tanks. Airlines are using that space on New York-bound flights to carry extra fuel, which can be used to get the planes back out of the region. Most planes would still have to top-off while on the ground in New York.

Ray Neidl, an airline analyst with the Maxim Group, called the decision “a wise move” that would have “minimal effect on profitability.” There is a large added expense of carrying all the extra fuel in, but compared to the overall cost of the operation, he said it is marginal.

Spending more on fuel is preferable to canceling flights, especially in a lucrative business market like New York. Delta Air Lines alone said Sandy cost it $20 million in profit in October because of cancellations.

Airlines typically buy fuel from local companies. Some airlines have larger stockpiles than others. For instance, Delta Air Lines Inc. recently bought an oil refinery outside Philadelphia, in part, to ensure that it had an adequate supply of fuel.

Delta kept the refinery running during the storm. CEO Richard Anderson said the airline used good forecasts from its in-house meteorologists to make the decision to keep facility open while some other Northeast refineries closed.

Delta spokesman Trebor Banstetter said the company didn’t expect “a jet fuel supply issue in the region.”

Regional airlines Chautauqua Airlines, Republic Airlines and Shuttle America are, however, loading extra fuel on some inbound flights, according to Peter Kowalchuk, spokesman for their parent company, Republic Airways Holdings Inc. Frontier Airlines, also owned by Republic, is adding additional fuel to its flights.

So is United Continental Holdings Inc., which operates a major hub out of Newark, N.J.

“Taking these precautions is not unusual in the event of snowstorms or other significant travel disruptions,” said spokesman Charlie Hobart. “We want to make sure that we can accommodate our customers and operate our aircraft effectively.”

Southwest Airlines Co. spokesman Brad Hawkins said: “We are adding extra fuel to mitigate having to fuel-up in the tri-State area. We do this often, for a variety of circumstances. In this case, it’s obvious supply issues.”

JetBlue Airways Corp., Virgin America and Spirit Airlines Inc. said they did not see a need to add fuel right now.

Analyst puts Hurricane Sandy losses at close to $200 million for airlines

Aviation Blog,

2 November, 2012

1. Deutsche Bank Securities analyst Michael Linenberg surveyed the field after Hurricane Sandy, and made a projection on the storm’s impact on airline earnings:

“We’ve seen reports that as many as 20,000 flights have been cancelled due to Hurricane Sandy. With Hurricane Irene a year ago, the cancellations were roughly 13,000 and the pretax impact to the US airline industry was about $100 million.

“Given that Irene occurred during late August, a busier travel period than late October, it would seem that the impact of Sandy to the US airline industry would be a little less than $200 million pretax.”

2. Wolfe Trahan analyst Hunter Keay did some “very rough estimates” of what the financial impact of earnings before interest and taxes might be:

AMR: About $30 million

Delta Air Lines: About $50 million

JetBlue Airways: About $20 million

Southwest Airlines: About $10 million

Spirit Airlines: About $5 million

United Continental: About $45 million.

US Airways: About $30 million

3. In a release Friday, JetBlue Airways indicated it sees a bigger financial impact in November than in October:

“Although JetBlue cancelled 1,484 flights in October due to Hurricane Sandy, the overall financial impact to JetBlue’s October profitability is not expected to be material.

“JetBlue cancelled 230 additional flights in November due to Hurricane Sandy, and the company expects short term demand to soften as customers focus their attention to recovering from the storm. As a result, fourth quarter impact is expected to be material.”

4. As Spirit Airlines discussed earnings on a Wednesday call, chairman and CEO Ben Baldanza said the storm will hurt Spirit’s Q4 results:

“Prior to Hurricane Sandy, we are forecasting that on a stage length adjusted basis, RASM [revenue per available seat mile] would have been up slightly or down year-over-year on an absolute basis. Unfortunately, Hurricane Sandy is expected to have a significant negative impact on the quarter.

“We started seeing an impact on sales as the storm moved through the Caribbean, and as the storm moved north, the impact was exacerbated by customers rebooking travel plans to avoid the storm.”

5. As we noted earlier, Delta Air Lines for October expects a $45 million reduction in revenues and a $20 million hit on net income because of the storm.

6. FlightAware.com, in its last public tally Thursday morning, put the total cancellations between Sunday and Thursday at 19,729.

7. FlightStats.com, in its last public tally a little later Thursday morning, put the total cancellations between Saturday and Thursday at 20,055.

8. The masFlight flight report put the cancellations between Saturday and Thursday at 20,713. That just covers the 32 U.S. and Canadian carriers airlines that it tracks.