Investors in all sectors are on edge. But that’s especially true for airlines, as the industry has an impressive history of losses during harsh economic times. Given the consolidation of the past decade, we suspect U.S. airlines are in better shape to handle a downturn than before. But we’ll need a crisis before we know for sure.
Delta Air Lines Inc. plunged the most in more than three years, pulling rivals lower, after disappointing ticket pricing prompted the carrier to cut its revenue forecasts.
- Fourth-quarter revenue from each seat flown a mile, also known as unit revenue, will rise 3 percent from a year earlier, the Atlanta-based airline said in a regulatory filing Thursday. Delta previously forecast a 3.5 percent gain. Total revenue will rise about 7 percent instead of the 7.5 percent that had been expected.
- The news added to investor concerns that industrywide fare increases would falter and weigh on profit. “The pace of improvement in late December was more modest than anticipated,” Delta said.
- Thursday’s update compounded anxiety after Delta in December said unit revenue, a closely watched gauge of pricing power, would trail the midpoint of a previous forecast.
- Delta said, however, that demand from business and leisure travelers remained “healthy” in the fourth quarter. “Momentum continues” for average fares per mile on near-term reservations, the airline said.
- Delta dropped 8.9 percent to $45.63 at 10:09 a.m. in New York after tumbling as much as 9.3 percent, the most intraday since August 2015. Other carriers fell sharply as well, bringing a Standard & Poor’s index of airlines down 7.2 percent, the worst performing group on the S&P 500.
- Delta narrowed its outlook for fourth-quarter profit to $1.25 to $1.30 a share, the high end of its earlier expectation.
- Delta filing
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Photo Credit: A passenger walks past Delta jets. Delta Air Lines issued a revenue warning on Thursday. Bloomberg