Delta revenue warning hurts airline’s stock
Delta Air Lines sent US airline stocks sliding yesterday, after warning that fourth-quarter revenues would be lower than forecast and reviving investors’ concerns that the industry will struggle to keep raising ticket prices.
The carrier predicted that adjusted unit revenue for the fourth quarter would rise 3 per cent, compared with prior guidance of 3.5 per cent, and an initial guidance range of 3 per cent to 5 per cent.
Investors worried that revenues will weaken in 2019 in an industry that has been notorious for profit-sapping price competition.
Shares in Delta were down 9 per cent by mid-morning in New York, American Airlines shares fell 8 per cent and United Continental dropped 5 per cent.
“The overall demand environment remains healthy with strength in both business and leisure segments throughout the quarter,” Delta said in an investor update, but it added a note of caution on the pace of ticket price rises at the end of last year.
“While close-in yield momentum continues, the pace of improvement in late December was more modest than anticipated.”
– Copyright The Financial Times Limited 2019