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United Airlines Seeing Effects of Weak Yen

On Tuesday, United Airlines said that it’s pricing and capacity from Japan will be impacted by the weakening yen.

Jeff Smisek, CEO of United Continental holdings (NYSE: UAL), the combined company that owns United Airlines as well as Continental, said that in the near term, the weakened yen would not affect it in the short term because the majority of travelers purchased tickets before the large-scale currency devaluation. The bigger problem will come as more people purchase tickets using the weakened currency.

The airline estimates that the weaker yen will cost it around $20 million in revenue in the first quarter and expects the pressure to continue.

The currency recently strengthened against the dollar but most strategists expect that the yen will continue to weaken as Japan Prime Minister Shinzo Abe ramps up policies that include massive bond buying that has, as its byproduct, a weakening yen.

Airlines aren’t the only industry feeling the currency pinch. Companies from automobile manufactures to electronics are re-evaluting revenue going forward based on the volatile currency.

Disclosure: At the time of this writing, Tim Parker had no position in any of the equities mentioned.

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