Delta Air Shares Slip As Rising Fuel Costs Weigh on Profits
Jun. 07, 2018
Delta Air Lines on Wednesday lowered its second quarter profit forecast due to rising fuel costs, and its shares fell as much as nearly 4 percent before trimming those losses.
The Atlanta-based carrier said it now expects to earn between US$1.65 and US$1.75 per share, down from its earlier projection of up to US$2 per share.
Its pre-tax margin will now fall somewhere in the 13 percent to 14 percent range, from its prior view of between 14 percent and 16 percent, the carrier said in a Wednesday report.
The airline's shares were down 1.5 percent at US$53.83 after earlier falling as low as US$52.63, extending about a 5 percent year-to-date loss. The Dow Jones U.S. Airlines Index .DJUSAR was down 0.5 percent and off nearly 12 percent for the year.
Delta said jet fuel prices have risen some 50 percent since last year and about 12 percent since the beginning of the quarter.
The rising cost of jet fuel is weighing on earnings across the U.S. sector, cutting into summer profits and prompting air fare increases.
Delta and its competitors are hoping strong demand, higher ticket prices and benefits from reductions in the U.S. corporate tax rate will eventually offset the impact of higher fuel prices. Rival American Airlines (AAL.O) cut its profit forecast in April, also citing higher fuel costs.