Airlines face losses as demand drops

CHICAGO (Reuters) – The number of empty seats on planes flown by U.S. airlines is rising this year despite aggressive fare sales and capacity cuts, darkening the outlook for industry earnings in the first quarter and beyond.

Airline data on March load factors, which measure how full an airplane is, showed a third consecutive month of declines and the largest drop for some carriers this year.

“We’re seeing some real good fare sale activity, but load factors are still dropping,” said Jim Corridore, airline analyst with Standard & Poor’s Equity Research. “So they are not able to get their planes full right now, and that is a bad sign.”

The airline industry has been battered since last year by economic recession that has eroded travel budgets. Carriers have fought back with sweeping capacity cuts and fare sales designed to generate spring and summer travel.

But March traffic data show that despite carriers’ best efforts to stoke demand, the decline in load factors is accelerating.

Reuters