Continental Reports January RASM Down 5 to 6 Percent

Continental was the first airline to announce its January operating performance, and it wasn’t a good one. Their report always includes more information than others, and it’s the RASM (click for definition) estimates that have me concerned. With RASM down 5 to 6 percent in January, even on strong capacity cuts, things aren’t looking good.

Despite having 6.5 percent fewer seats flying this January than last, the airline still struggled to fill its planes. Traffic was down 11 percent resulting in a 3.6 percent decrease in load factor. On top of that, RASM declined 5 to 6 percent, so it’s safe to say that we’re seeing some real weakness here. The question is . . . how bad is it?

One month can never give you the answer. As we saw in November, Southwest had an awful month, but they rebounded in December. It takes at least a couple of months to know that the airline didn’t just mistakenly hold back too much inventory for last minute travel. But we’ve been hearing warnings about slowing traffic for awhile, so this isn’t a surprise.

The weakness was quite obvious in North America where traffic declined 3 points, but transatlantic travel really was hit hardest. Transatlantic load factor dropped a whopping 6.7 percent. This doesn’t bode well for airlines like Delta which are very heavy in the Atlantic.

One thing to consider here is the shifting calendar. Last year, the Sunday after New Years wasn’t until January 6, but this year it was on the 4th. So they did have a couple more days of heavy travel last year, but that won’t explain everything. This is still cause for concern.