Blackout may cost airlines tens of millions in lost revenue
By John Hughes
Bloomberg News Service
NEW YORK — Northwest Airlines Corp., AMR Corp.'s American Airlines and U.S. carriers may lose tens of millions of dollars as flight disruptions triggered by the power failure in parts of eight states linger into next week.
Associated Press
Airlines that canceled 700 flights Thursday and hundreds more yesterday resumed operations in Detroit and Cleveland. Only a few flights were made from New York's John F. Kennedy and LaGuardia airports, where terminals remained without power or lacked enough electricity to support flight operations.
A stranded traveler sleeps in the baggage claim area at John F. Kennedy airport in New York. A power outage Thursday caused flight disruptions at Northeastern airports, stranding travelers for up to 48 hours or more.
U.S. carriers are losing about $100 million in revenue every day service is disrupted, said David Swierenga, former chief economist for the Air Travel Association. U.S. carriers have lost as much as $21 billion from a sluggish economy, the 2001 terrorist attacks, the Iraq war and the spread of severe acute respiratory syndrome.
"This is obviously bad news," said Swierenga, a consultant with Vienna, Va.-based AeroEcon.
Passengers will find delays until Tuesday or Wednesday as airlines reposition aircraft and shift stranded travelers to crowded summer flights, said Kevin Mitchell, chairman of the Business Travel Coalition of frequent travelers.
The power failure, stretching from New York to Michigan and Canada, will cost airlines tens of millions of dollars in lost revenue, overtime pay and the cost of paying for meals and hotel rooms for stranded passengers, Mitchell said.
"At this point every dollar is a financial issue" for airlines, Mitchell said. Airlines "wouldn't be taking the olives out of your and my salads if a dollar didn't matter."
The blackout is similar to a couple days of bad thunderstorms that force flights to be canceled, said Jon Ash, managing director of Global Aviation Associates, a Washington consulting firm. "The pain is sort of disbursed" among a number of the largest carriers, he said.
Detroit is the 11th busiest U.S. airport, Kennedy is the 14th busiest and LaGuardia the 21st, according to the International Air Transport Association, based on 2001 passenger figures. Detroit handled 32.3 million passengers, JFK 29.4 million, and LaGuardia 21.9 million in 2001, the group said.
The Port Authority of New York and New Jersey, which operates the region's airports, urged travelers not to go to Kennedy or LaGuardia, where passenger terminals had "severe crowding and congestion" and roadways neared gridlock.
"It's packed and nobody's going anywhere," Delta spokeswoman Peggy Estes said of Kennedy.
Manual screening
At LaGuardia this afternoon, "they have thousands of people stranded," said Nico Melendez, a spokesman for the Transportation Security Administration.
TSA workers, some stranded at airports since yesterday, were forced to manually screen some passengers at LaGuardia, JFK and Detroit because of a lack of electricity for machines, he said.
"The airport may be open, but that doesn't mean all the infrastructure inside the airport that we need to operate is up and running," Bertolini said of Kennedy. American waived fees to change flights until Aug. 21.
'Severe delays'
United, the world's second-largest carrier, canceled 60 flights yesterday and warned of the potential for more as power remained out to its terminals at Kennedy and LaGuardia.
"We are having severe delays and cancellations into and out of JFK and LaGuardia," said spokesman Jeff McAndrews. "We're at a standstill right now."
Egan, Minn.-based Northwest, the fourth largest U.S. carrier, canceled 216 flights yesterday, mostly to or from Detroit, spokeswoman Mary Stanik said. She had no updated numbers for today. Northwest has extended through Monday its waiver on charges to change a flight and will try to put affected passengers on other flights through that day.
Northwest shares fell 4 cents to $8.76 at 3:59 p.m. in New York Stock Exchange composite trading.
Continental had a nearly normal flight schedule from its hub at Newark, although most of 16 flights from LaGuardia were canceled, said spokesman Rahsaan Johnson. Continental made its three daily flights out of Kennedy. It canceled 33 flights yesterday and seven early today.
Delta shares fell 19 cents to $11.10, while Continental dropped 9 cents to $13.31. United Parcel rose 28 cents to $63.98 and FedEx increased 36 cents to $67.36.
Pickups, deliveries
The power outage scrambled scheduled pickups and deliveries by United Parcel Service Inc. and FedEx Corp. Both companies declined to comment on the potential financial impact as the outage grounded planes, left some sorting facilities without power and closed customers' businesses.
United Parcel was unable to make an unspecified number of deliveries because businesses were closed, spokesman Norman Black said. Deliveries also were slowed in some areas by continuing traffic tie-ups, he said.
The company will clear the backlog by expanding Saturday deliveries and adding extra drivers and helpers Monday.
"We're very confident by working this weekend that we will have cleared everything by Monday," Black said.
