US Airways Group Inc (LCC), JetBlue Airways Corporation (JBLU): Could Budget Cuts Keep Your Flight Grounded This Summer?

The other danger for airlines is that passengers who do travel will become disgusted by the delays. Airlines already have a hard time keeping customers happy, and cascading delays will only make it harder to deliver acceptable customer service. A further ratcheting up of customer discontent could continue hurt the most-affected airlines for months or even years after the end of FAA furloughs.

United Continental Holdings Inc (NYSE:UAL) and American Airlines could be affected the most. The two carriers were already at the bottom of last year’s Airline Quality Rating survey. Furthermore, both airlines have a strategy of building hubs in the top business markets. These cities – such as New York, Chicago, and Los Angeles – tend to have the most crowded airspace. As a result, these carriers are likely to have multiple hubs hit with significant delays on peak travel days, which could snarl operations across their systems. JetBlue Airways Corporation (NASDAQ:JBLU) could also see a disproportionate effect because its main base of operations is at New York’s busy JFK Airport.

Foolish conclusion
Investors should not panic yet; it is possible that a few days of delays will force Congress and the FAA to compromise in order to avoid a national air traffic mess. However, political gridlock in the U.S. could lead to a continuation of the status quo, which could anger travelers and hurt profits at a number of major carriers. With most airlines reporting earnings this week, it will be useful for investors to hear what industry executives have to say about the problem and the ways to minimize the effect on customers.

The article Could Budget Cuts Keep Your Flight Grounded This Summer? originally appeared on Fool.com.

Adam Levine-Weinberg is short shares of United Continental Holdings (NYSE:UAL) and is long Sep 2013 $33 Puts on United Continental Holdings. The Motley Fool has no position in any of the stocks mentioned.

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