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Delta cuts forecast for first-quarter revenue after missing March projections

Apr 02, 2013 8:31 am

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Delta says the drop in last-minute bookings was caused the U.S. budget cuts and new technology, but any drop is a foreboding sign just one month after AA and US Airways announced their merger.

— Samantha Shankman

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Aircraft models are seen following a news conference to announce the sale of Virgin Atlantic airline to Delta Air Lines, in New York December 11, 2012. Brendan McDermid / Reuters


Delta Air Lines Inc on Tuesday cut its first-quarter forecast for a key revenue measure as March performance weakened from January and February, and its shares fell nearly 8 percent.

Unit revenue, a measure of pricing power and the extent to which planes are filled, rose 2 percent in March. That measure, which is also known as passenger revenue per available seat mile, had risen 5 percent in February and 5.5 percent in January.

Delta cited lower last-minute bookings in the wake of U.S. budget pressures, lower than expected demand and temporary inefficiencies as it rolled out new revenue management technology for the March unit revenue performance.

In an investor update filed on Tuesday, Delta said it now expects a rise of 4 to 4.5 percent in first-quarter unit revenue compared with the prior year. That compared with a prior view of a rise of 4.5 to 5.5 percent for the quarter.

Delta said it still expects a profitable first quarter.

System traffic rose 0.1 percent in March as the number of passengers boarded fell 0.7 percent in the month.

Shares of Delta were down 7.6 percent at $15.02 on Tuesday morning. Other U.S. airlines were also lower, with United Continental Holdings down 4.2 percent at $29.67, and US Airways Group off 4 percent at $16.

Reporting by Karen Jacobs in Atlanta.Editing by Matthew Lewis.

Copyright (2013) Thomson Reuters. Click for restrictions

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