Delta Traffic Falls, Stock Follows Suit
Today, Delta (NYSE: DAL) is trading down over 10% on news that business slowed in May. Delta reported that revenue per seat per mile increased 6% vs. a predicted 7% gain that the company reported midway through May. The airline attributed the smaller gain to fare actions by an unnamed competitor, a reasoning that should spook investors. If another airlines pricing can hurt revenue growth that much, investors may want to think twice.
Earlier last month, Delta also reported that it would cut capacity on Atlantic flights by 5% after Labor Day and that it expected capacity for the full year would fall 3-4%. This announcement only adds to the bleak view on airlines, however some relief can be found in the recent fall in oil prices. Today, Delta said that the European Debt Crisis is affecting traffic, with trans-Atlantic flight capacity down 3.7%.
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