United Airlines Blames Paris Attacks for Low Passenger Traffic in Q4 Revenue Stats, Loses ‘America’s Second-Largest Airline’ Title
United Airlines has been stripped off as the second-largest airline company in the United States after its rival, Delta Air Lines Inc., passed their traffic figures. Delta's gain came after a series of mergers changed the industry landscape. While United Continental Holdings Inc., United's parent company, announced on Monday that the Nov. 13 Paris attacks affected the company's passenger traffic in the fourth-quarter revenue stats.
In a detailed report late Monday, United Airlines revealed its preliminary financial and operational outlook for the fourth quarter 2015 and full year 2015. And based on the figures, the company's Q4 passenger traffic has weakened and the company said it was partly due to the effect on travel from the terrorist attacks in Paris in November 2015, which killed about 130 people in the French capital.
Even though the company did not reveal the amount of the effect, their revenue was between 5.75 and 6.25 percent lower than in the same quarter of 2014. According to USA Today, the airline company had initially expected a fall between 4 and 6 percent.
Aside from the threats of terrorism, the weak Q4 revenue figure was also affected by cutbacks in flying by energy-sector employees, which was in a recession due to lower oil and gas prices. Another proof of the weaker demand was due to the downward revisions to gross domestic product in the last quarter of last year, Chicago Tribune noted.
Due to the decline, United Airlines was surpassed by Delta as America's second-biggest airline in terms of traffic in 2015. Based on the reports, United had 208.6 billion in revenue passenger miles in 2015. Delta, on the other hand, had 209.6 billion and now sits behind American Airlines Group Inc. as the nation's largest carrier by traffic.
According to Sterne Agee CRT associate analyst Adam Hackel, some of Delta's gain may be attributed to the challenges that United Airlines faced during its merger with Continental Airlines. He also added that Delta is offering better service and product than United.
"The reality is, Delta offers better service and a better product than United," Hackel said, as per Bloomberg Business. "My first thought was people probably prefer to fly Delta now."
While Raymond James Financial analyst Savanthi Syth said that Delta was gaining ground because of the company's growth at home and abroad, particularly in Brazil. And since traffic is calculated with flight distance, Syth said that the company's growth overseas can bump up an airline's standing.
In other news, Southwest Airlines' traffic increased by 8.6 percent in December while Virgin America said its December traffic rose 3.6 percent. Unfortunately, Virgin's occupancy fell to 82.2 percent from 82.3 percent in 2014.
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