United Releases Weaker Revenue Guidance

(MoneyWatch)  When I see a new 8-K being release by an airline these days, I instantly get nervous. The news has not been good, to say the least. This time, it was United's 8-K that made me a bit queasy.

Looking at revenue, United now says that during the first quarter, revenue per available seat mile (RASM) will be down a steep 11 to 12 percent. Ugh. And United has been one of the most disciplined airlines when it comes to capacity cuts. Capacity continues to be down by more than 11 percent year over year.

What does it mean when capacity is down that much and you still see double digit RASM decreases? It means what we've been talking about all along - travel demand has certainly not reached the bottom yet. Now that even reduced capacity hasn't stemmed the bleeding, the airlines will likely increasingly turn to fare sales to stimulate demand. I'm not sure what else there is that can be done right now.