Disappointing outlook from Delta drags down airline stocks

DALLAS (AP) – Airlines stocks were pummelled on Thursday after Delta Air Lines Inc trimmed its revenue forecast for the fourth quarter, renewing investors’ fears that airlines will squander the savings they are reaping from the recent drop in fuel prices.

Delta shares plunged nearly nine per cent, their worst one-day showing since 2012, to close at USD45.61.

The parent companies of American Airlines, United Airlines and Alaska Airlines all dropped about five per cent or more.

Delta, the United States (US) No 2 carrier by traffic, said that a closely watched figure of revenue per mile rose about three per cent in the fourth quarter, a half-point lower than Delta predicted last month and a full point below its October forecast.

The Atlanta-based airline said prices for tickets sold close to departure — often at higher prices — rose less than expected in late December.

Delta said travel demand remained healthy, but its revised revenue outlook fanned fresh fear of weaker airline pricing power seeping into 2019, especially if global economic growth slows.

A Delta Air Lines passenger jet plane, a Boeing 737-900 model, approaches Logan Airport in Boston, the United States. – AP