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United Won't Fly 737 Max Until January, Holiday Travel Further Muddled
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United Airlines Holdings Inc. (NASDAQ: UAL) said Friday that the airline was canceling all flights scheduled for Boeing Co. (NYSE: BA) 737 Max passenger jets until January 6, 2020, as regulators in the United States and elsewhere continue reviewing changes to the globally grounded aircraft’s software.
The company said it would cancel more than 8,000 flights in October, November and December that had been scheduled for its fleet of 14 737 Max jets. The cancellations follow announcements by Southwest Airlines Co. (NYSE: LUV) to cancel 737 Max flights through January 6 and American Airlines Group Inc. (NASDAQ: AAL) to cancel flights through January 15.
However, airline stocks got a boost Friday after low-cost carrier Spirit Airlines Inc. (NASDAQ: SAVE) raised its guidance for third-quarter results. The carrier still expects revenue per available seat mile to be down, just by less than it had previously forecast. Operating costs excluding fuel also will be higher, but not by as much as a prior estimate had calculated. Fuel costs are expected to drop by nearly 12%, and available seat miles are expected to rise by 11.6%.
Earlier this week, Delta Air Lines Co. (NYSE: DAL) reported solid third-quarter results but announced hiring plans to meet rising demand took shares lower. Spirit’s announcement is having the opposite effect. Its shares are up about 10.5%, and the other major carriers are also trading higher.
The cancellation of 737 Max flights has reduced supply and raised demand for seats and that means that the airlines can raise prices. Airlines have been able to accommodate travelers by raising seating capacity on high-demand routes while suspending or reducing service on less popular routes. That won’t work as well for holiday travel when demand for travel to smaller airports increases. Airlines will face some tough choices in the next couple of months.
If you haven’t already booked holiday travel on a non-737 Max jet, there are four U.S. airlines that have none of the planes in their fleets and thus have a much lower chance for any kind of cancellation: Delta, JetBlue Airways Corp. (NASDAQ: JBLU), Alaska Air Group Inc. (NYSE: ALK) and Frontier Airlines.
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