Delta fare warning sends airline stocks lower

Major US airline stocks fell sharply Thursday after Delta Air Lines warned about weaker than expected sales ...

Posted: Jan 3, 2019 6:16 PM
Updated: Jan 3, 2019 6:16 PM

Major US airline stocks fell sharply Thursday after Delta Air Lines warned about weaker than expected sales and fares at the end of 2018.

Delta (DAL) shares tumbled 8% on the revenue guidance.

Air fares

Air transportation

Airlines

Banking, finance and investments

Business and industry sectors

Business, economy and trade

Companies

Delta Air Lines Inc

Financial markets and investing

Securities trading

Stock markets

Transportation and warehousing

The airline said it had been anticipating higher fares from business travelers making last-minute reservations in December, but those reservations didn't happen.

It was the second time in the last two months that Delta has lowered its revenue guidance. Delta said it expects earnings to come in at $1.25 - $1.30 a share, which remains at the high end of its previous outlook.

Still the revenue guidance spooked investors across the sector.

Shares of American (AAL), the largest airline, also plunged 8%, and United Continental (UAL) shares fell 5%. Southwest (LUV) shares were down 3%.

"Given when Christmas fell this year there was some hope business travel would stay strong through December 21, and that appears not to have happened for Delta," said Helane Becker, an airline analyst with Cowen, in a note to clients Thursday.

Becker said airline stocks fell because Delta's guidance offered another sign that the sector could be about to be hit by broader, global economic weakness.

"If you look at all the geopolitical issues affecting the world this year, the slowdown in China, Brexit in Europe, and what all of that means for the US economy, there's a lot of uncertainty. And the airlines have to deal with all of that," she told CNN Business.

Some good news for airline earnings, at least in the short-term, comes from the recent decline in oil prices. Delta said fuel costs in the fourth quarter were about 10 cents per gallon cheaper than it had previously expected. Fuel is a major expense for airlines.

But Becker said even that can cause some problems for the sector, since lower oil can prompt airlines to add more flights, which in turn leads to more competition and lower fares.

"Most of the airlines are hesitant to bring back much capacity in first half of 2019 because they don't know how long oil will stay this low," she said. "But if it stays here through the summer, you might see more capacity in the second half of the year."

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 39589

Reported Deaths: 1523
CountyConfirmedDeaths
Hennepin12703789
Ramsey5013230
Dakota247993
Stearns242919
Anoka2293110
Nobles16726
Olmsted116817
Washington116340
Mower9652
Rice8598
Scott7834
Clay59538
Kandiyohi5821
Blue Earth5102
Wright4925
Carver4171
Todd4022
Lyon3272
Sherburne3275
Freeborn2980
Watonwan2400
Steele2391
Benton2213
St. Louis19816
Nicollet17612
Martin1715
Cottonwood1370
Goodhue1328
Winona13115
Le Sueur1101
Pine1100
Crow Wing10912
Chisago1021
Otter Tail1001
McLeod940
Dodge920
Carlton880
Unassigned8738
Polk842
Chippewa791
Isanti760
Waseca710
Douglas660
Murray660
Itasca6512
Pipestone632
Meeker611
Morrison611
Faribault600
Becker570
Jackson550
Sibley552
Pennington520
Brown372
Renville362
Beltrami350
Wabasha350
Mille Lacs342
Rock310
Fillmore300
Yellow Medicine300
Houston280
Swift231
Norman210
Wilkin213
Redwood200
Cass192
Big Stone170
Grant170
Koochiching171
Roseau170
Aitkin150
Kanabec151
Wadena150
Marshall120
Pope120
Lincoln110
Mahnomen101
Clearwater90
Hubbard80
Lake60
Stevens60
Traverse60
Lac qui Parle40
Red Lake40
Kittson20
Cook10
Lake of the Woods00

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 32533

Reported Deaths: 735
CountyConfirmedDeaths
Polk6827181
Woodbury326444
Black Hawk235558
Buena Vista172411
Johnson13638
Linn132382
Dallas129829
Marshall106319
Scott88310
Story8194
Dubuque77122
Pottawattamie75812
Wapello71231
Crawford6793
Muscatine67544
Sioux4880
Tama47329
Wright3881
Louisa36313
Jasper32917
Plymouth3275
Warren2971
Dickinson2823
Webster2524
Washington2479
Cerro Gordo2011
Hamilton1921
Boone1571
Clay1421
Allamakee1354
Clarke1343
Mahaska11817
Shelby1170
Clinton1151
Poweshiek1078
Carroll1041
Pocahontas1011
Bremer987
Franklin980
Des Moines942
Emmet910
Henry883
Cedar851
Hardin830
Taylor810
Cherokee791
Monona770
Floyd742
Marion740
Benton691
Guthrie694
Jones650
Osceola640
Sac640
Jefferson620
Iowa611
Buchanan601
Butler602
Humboldt571
Calhoun552
Hancock541
Harrison540
Lee542
Delaware531
Fayette520
Monroe517
Madison492
Lyon470
Clayton463
Mills430
Winneshiek430
Davis421
Palo Alto420
Mitchell410
Grundy400
Howard370
Jackson370
Kossuth370
Union360
Lucas314
Winnebago300
Chickasaw290
Greene290
Cass240
Ida230
Appanoose213
Van Buren210
Keokuk201
Page200
Unassigned200
Worth200
Adair170
Audubon161
Ringgold150
Decatur120
Montgomery102
Wayne100
Adams80
Fremont80
Rochester
Clear
74° wxIcon
Hi: 83° Lo: 63°
Feels Like: 74°
Mason City
Clear
73° wxIcon
Hi: 85° Lo: 65°
Feels Like: 73°
Albert Lea
Broken Clouds
75° wxIcon
Hi: 82° Lo: 64°
Feels Like: 75°
Austin
Clear
73° wxIcon
Hi: 83° Lo: 64°
Feels Like: 73°
Charles City
Clear
73° wxIcon
Hi: 84° Lo: 64°
Feels Like: 73°
Heat Advisory in effect until 7pm
KIMT Radar
KIMT Eye in the sky

Latest Video

Image

Reopening NIACC Safely

Image

Social Justice Program Gets Underway

Image

Group gathers to pray for racial justice

Image

Prep athletes eager to get back into the weight room

Image

Sean's 6pm Weather 7/8

Image

Bishop writes to ask for clemency for Dustin Honken

Image

Catch a ride to stay cool

Image

Free masks in Rochester

Image

Boys & Girls Club back open

Image

Rochester Elementary School releases plans

Community Events