Airline Sector Faces Turbulence

Major airline stocks trade lower on Wednesday after Delta Air lines, Inc

released results and guidance for the month of June. In a press release Wednesday, Delta reported a 3 percent change in aircraft fuel and related taxes, stating volatile fuel prices impacts the comparability of non-fuel financial performance year-over-year. Unit revenues increased by 6 percent in Junes quarter, coming in line with guidance given in late April, unit revenues for the month of June increased 4.5 percent year over year. Guidance given by Delta included average fuel price per gallon, including taxes, settled hedges and refinery impact between $2.93 to $2.98, a $0.07 to $0.12 improvement from the $3.05 reported in December for the company's Q1. June operating margins expected to be 14 to 16 percent, with operating cash flows projected to be $2 billion, $3 billion lower than the $5 billion reported in 2014 Q1. Delta trades lower by 4.81 percent United Continental Holdings

down by 5.49 percent American Airlines

down by 2.92 percent Spirit Airlines Incorporated

down by 1.36 percent. Cowen analyst Helane Becker mentioned in a note, Delta reports lower than anticipated international yields and a decrease in business demand in Latin America (especially in Brazil) for June, because of the World Cup. Despite Becker's concern, the Cowen note reiterated a Buy rating on Delta based on the firms positive outlook for Delta's long term growth.