Iceland volcano ash costing U.S. airlines $20 million a day

By Aaron Smith, CNNMoney.com staff writer


NEW YORK (CNNMoney.com) -- The enormous ash cloud from an Icelandic volcano that has shut down European air space is costing U.S.-based airlines tens of millions of dollars per day, according to an analysis from an airline expert.

The five largest U.S.-based international carriers -- Delta Air Lines (DAL, Fortune 500), UAL Corp.'s (UAUA, Fortune 500) United Airlines, AMR Corp.'s (AMR, Fortune 500) American Airlines, Continental Airlines (CAL, Fortune 500) and US Airways (LCC, Fortune 500) -- are collectively losing $21.9 million per day, according to Robert Herbst, analyst and founder of AirlineFinancials.com.

Delta has the biggest presence in Europe and is therefore losing the most money, he said, racking up losses of $6.5 million per day.

Spokespeople for Delta and three of the other airlines -- American, US Airways and United -- said it was too early to discuss financial losses. Continental did not respond to requests for comment.

Also, couriers FedEx (FDX, Fortune 500) and UPS (UPS, Fortune 500) announced that air shipments to Europe are delayed. FedEx spokeswoman Sally Davenport said her company had suspended 100 flights to Europe since April 15, but that it was still making some "urgent" shipments of packages weighing less than 150 pounds.

A UPS spokesman emphasized that ground operations within Europe are still functioning.

"UPS will not speculate as to the economic impact of the volcano, but...we're still keeping intra-European shipments moving across borders due to UPS's extensive ground network," said UPS spokesman Mark Dickson.

Grounded on the Continent

Some 63,000 flights had been canceled in Europe by the end of Sunday, in the four days since the air space of northern Europe was shut down by an enormous ash cloud from an erupting volcano beneath the Eyjafjallajokull glacier in Iceland.

European airlines are collectively losing at least $200 million per day, according to the International Air Transport Association. Steve Lotts, spokesman for the industry group, said that total losses have exceeded $1 billion so far.

And passengers are scrambling to find alternative travel routes. German tourists are being bussed home from Spain, while the Royal Navy is sending military ships to Spain to bring home stranded Brits. Comedian and Monty Python alumni John Cleese reportedly paid thousands of dollars to take a cab from Brussels to his home in London.

Meanwhile, the European airline industry is lobbying officials to return to business as usual. The Airports Council International and the Association of European Airlines, released a joint statement questioning the "proportionality of the flight restrictions currently imposed."

"The eruption of the Icelandic volcano is not an unprecedented event, and the procedures applied in other parts of the world for volcanic eruptions do not appear to require the kind of restrictions that are presently being imposed in Europe," read the joint statement.

This particular Icelandic volcano last erupted in 1821 and continued to spew ash for two years.

Analyst Robert Herbst, a commercial airline pilot since 1968 and a former test pilot, said the problem is likely to persist "through the middle of this week at least."

However, German carrier Lufthansa and the Dutch carrier KLM have reported successful test flights and British Airways announced that it will attempt some flights into and out of London airports on Tuesday evening.

But even if the airplanes can fly safely, the ash could cause tremendous damage to the jet engines that would be extremely expensive to fix, he said.

He cited news reports saying that F-16 fighters from NATO and the Finnish Air Force have already reported engine damage after flying through the ash cloud.

Herbst also said that airlines will have a tough time predicting the day-to-day severity of the ash cloud in order to plan any flights.

"The radars on the aircraft do not pick up ash, so it's a visual thing, and during the night you can't see it at all," he said. To top of page

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