Continental Reports "Significant" Yield Degradation, US Airways Doesn't
Those who follow Continental got an unexpected surprise yesterday when the airline issued an 8-K with some ominous revenue predictions.
According to the filing, Continental reports:
Largely as a result of declining business travel, the Company has experienced yoy yield degradation, which has accelerated sequentially since January 2009 and has become significant. As a result, yoy revenue per available seat mile ("RASM") on both a consolidated and mainline basis has deteriorated, and that deterioration has accelerated sequentially since January 2009 and has become significant as well.According to PlaneBuzz, Continental's RASM will be down an incredible 18 percent year-over-year in March. The 8-K says that booked load factors are actually up for the short term future, but overall for the first quarter, we'll see loads down 3 to 4 points. So this is likely to be a mix of fewer people traveling combined with people paying less to fly.
The bad news at Continental was tempered somewhat by opposite news from US Airways. President Scott Kirby said that March revenues have been improving, demand is stable, and ancillary revenue efforts are helping to offset some of the weakness.
It's hard to figure out what to make of these numbers, but US Airways having a hub in Phoenix can't hurt, especially since it receives heavy demand in March. It's also possible that Continental's greater exposure to intercontinental markets has left it feeling more of the pinch. We'll know more when March traffic information is released.