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American and Southwest airlines both reported a plunge in second-quarter profits on Thursday in the latest sign of the US industry misjudging demand for domestic flights. The carriers pledged to cut back flying in the second half of the year and promised changes to improve financial performance. American will continue to unwind a sales strategy that proved unpopular among business travellers and their travel agencies. Southwest, which is under pressure from activist investor Elliott Management, said it would offer assigned seating for the first time in its more than 50-year history. Budget carriers have been hit hardest by the oversupply of capacity in the US market, forcing them to lower fares. But the largest airlines have felt the strain too, with American chief executive Robert Isom saying it had “led to a higher level of discounting than we anticipated” in the second quarter. The lacklustre results follow massive disruption to air travel on Friday due to the worldwide IT outage caused by Crowdstrike’s faulty software update. Though most had recovered by last weekend, Delta Air Lines struggled through Tuesday to right its operations. The US Department of Transportation said it would investigate whether the carrier followed regulations for treatment of passengers on cancelled or delayed flights. Citi analyst Stephen Trent estimated the disruption would cost Delta earnings equal to 60 cents per share, or about $387m, in the third quarter. Melius Research analyst Conor Cunningham calculated a $350m hit to operating profit, with a fine from the Department of Transportation likely to follow. “What is more uncertain is the reputational damage Delta’s image may take,” he said. “It is certainly plausible forward bookings are impacted.” American also is suffering the continued consequences of its attempt to compel corporate travellers to book tickets directly through the airline rather than travel agencies. It said in May it would abandon that strategy, but Isom said on Thursday that in the second quarter it failed to win back the share of corporate travel that it wanted.<br/>

Hong Kong’s civil aviation authority has told Cathay Pacific Airways to investigate and submit a report on a junior pilot who failed an alcohol breath test just before he was scheduled to fly to the city from Sydney, which caused a lengthy delay to the flight. The Civil Aviation Department on Thursday said aviation safety was of the utmost importance and that it was very concerned about the incident. The department emphasised that flight crew members must not be affected by psychoactive substances to a degree that could affect their capacity to act or could jeopardise the safety of the aircraft. Hong Kong flag carrier Cathay Pacific told the Post on Thursday morning it was investigating the second officer on flight 110, who failed the test in Sydney on Tuesday. The airline emphasised safety was its “overriding priority” and it had a zero tolerance for staff who did not comply with alcohol rules. “Cathay Pacific is aware of the reports and we are maintaining close communication with the relevant authorities,” a Cathay spokesman told the Post. “The second officer in question has been suspended from flying duties with immediate effect, pending a full investigation. “Safety is our overriding priority and we have a zero-tolerance approach to non-compliance with our alcohol and other drugs (AOD) policy, which sets out the company’s standards and guidelines on handling any problematic use of alcohol or other drugs.”<br/>