Airline Rally Stalls; Delta Cuts Outlook

Airline stocks' upward flight stalled Tuesday following a rally earlier in the week touched off by Southwest Airlines Co (NYSE: LUV) pull-back on its capacity expansion.

Delta Air Lines, Inc. (NYSE: DAL) on Tuesday posted disappointing guidance for its June quarter.

Delta slipped more than 2 percent at $43.31. The company blamed its reduced outlook for passenger revenue on lower-than-expected results from domestic business travel.

Most other major airlines were off by less than a point Tuesday afternoon, and the NYSE Arca Airline Index (NYSE: XAL) was unchanged. The index is up about 0.7 percent in the past week.

Southwest Airlines traded recently at $37.99, up $0.14.

Southwest shares had gained as much as 4 percent on Monday after the company's Chief Executive Gary C. Kelly told Bloomberg that Southwest increase its capacity by just 7 percent this year, rather than the 8 percent goal it previously forecast.

Virgin America Inc (NASDAQ: VA) on Tuesday rose $0.35 to $29.34. Virgin gained about 2.8 percent during the past five trading days.

Virgin didn't issue any news Tuesday.

Airline investors recently wrapped up a tough month, with the NYSE Arca Airline Index off nearly 7 percent during May on worries about declining unit revenue growth and added capacity during the second half of the year.

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