United Airlines says weak yen may hit capacity, pricing


United Airlines' capacity and pricing of flights to and from Japan will be affected if the value of yen remains depressed, the company's chief executive said on Tuesday.

Jeff Smisek, CEO of United Continental holdings , told reporters in Chicago that the short-term effects of the currency's fall were offset by the fact that many tickets were bought before the decline.

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But over the longer term, it could affect the airline's capacity and the price of tickets. United has already said that yen depreciation cost it about $20 million in passenger revenue in the first quarter, and that it expects continued pressure throughout the year.

Currently, about one-third of the airline's service in the Pacific region is between the U.S. and Japan, with two-thirds between the U.S. and China, the company said. That "makes our exposure less than some of our peers," a spokeswoman said.

Delta Airlines said on Tuesday that passenger revenue fell by 1 percentage point in May from a year ago because of the yen effect, but that was offset by higher revenue at its hubs in New York.

The yen has fallen more than 30 percent against the U.S. dollar since late last year, when Shinzo Abe, now Japan's prime minister, prescribed radical monetary easing to reverse years of sliding consumer prices as part of a deflation-fighting policy, dubbed "Abenomics."

The Japanese currency has gained about 3 percent against the dollar in the last month.

(Reporting by Nivedita Bhattacharjee in Chicago; Editing by Alwyn Scott and Steve Orlofsky)