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Scheduled system seat capacity for the Sep-Dec four-month period shows seats +5.4% y/y, down 27bp w/w largely on AAL’s recent MAX cuts. Domestic seat growth was down 28bp w/w to +5.8% y/y, as AAL and UAL cuts were slightly offset by adds from JBLU and ALGT. Pacific capacity was down 25bp w/w to +2.2% y/y, transatlantic was flat w/w at +5.8% y/y, and Latin was down 37bp w/w to +0.9% y/y. Int’l capacity growth was down 27bp w/w to +2.3% y/y. Domestic competitive capacity was down 38bp w/w to +6.1% y/y.

We survey investors quarterly to quantify sentiment and views on key topics. This quarter we had 91 replies. Thanks for replying, if you did! For context, all survey answers were submitted before DAL’s investor update on Tuesday morning (7/2/19). This survey had some atypically polarized and useful results. 

In March 2019, U.S. airlines were scheduling domestic ASM growth of +5.0% y/y in 2Q19. Due to MAX groundings that will turn out to be just +3.4% y/y, so a ~2pp cut relative to the pre-grounding plan. Demand has stayed strong and lower capacity is probably providing an incremental tailwind on pricing, but with a net headwind to revenue (and earnings) due to temporarily lower capacity. May-Aug load factors in the U.S. are by far the highest, averaging 87% over the last five years relative to 83% outside those months. Marginal changes in supply have a magnified pricing benefit when loads are high. We’re sure airlines would be citing strong demand even if the MAX had never been grounded but we also guess the MAX groundings are aiding 2Q RASM by at least 1pp for U.S. airlines. We expect this dynamic will help 3Q RASM guides, too. Still, we continue to believe MAX delays are bad for these businesses and for the stocks, and trading them higher on further delays is foolish.