Delta Air Lines Inc. (SPX) fell the most in the Standard & Poor’s 500 Index after it lowered forecasts for some third-quarter targets, dragging down the shares of other U.S.-based carriers.
Delta slid 5.2 percent to $38.82 at the close in New York, its biggest daily decline since June 12. The Bloomberg U.S. Airlines Index fell 2.9 percent, with all 11 member companies down, and the S&P 500 was little changed.
In a presentation to analysts at a Cowen & Co. conference, Delta said third-quarter revenue for each seat flown a mile will increase 2 percent to 3 percent, down from a previous forecast of 2 percent to 4 percent. The Atlanta-based carrier also lowered its quarterly operating margin outlook to 15 percent to 16 percent, from a 15 percent to 17 percent range in July.
Chief Financial Officer Paul Jacobson, speaking to analysts at the conference, cited overcapacity in trans-Atlantic routes, geopolitical events in Russia and the Middle East, and the Ebola outbreak as weighing on unit revenue. Those issues damped unit revenue by about 1 percentage point, Delta said in a statement before the presentation.
The pared-back targets come as the third-biggest carrier raised its projection for fuel prices by 2 cents to $2.90 to $2.95 a gallon.
Delta’s shares have risen 41 percent this year, as it has seen strong U.S. demand and packed planes. The carrier reiterated today that it’s still on track to produce more than $4 billion in pretax income for 2014.
The market has punished Delta before when it has issued revenue and earnings forecasts mid-quarter that were lower than earlier projections, JPMorgan Chase & Co. analyst Jamie Baker said in a research note. Delta last said that earnings would come in at the low end of its forecasts in April 2013, and the shares fell 8 percent that day, he said.
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