Delta Leads Airline Rally After Boosting Margin ForecastMary Jane Credeur and Jennifer Surane
Delta Air Lines Inc. led gains by U.S. carriers after it increased the lower end of its operating-margin forecast for this quarter on strong travel demand and lower jet-fuel costs.
Delta shares advanced 3.5 percent to $18.71 at the close in New York, while the Bloomberg U.S. Airlines Index rallied 2 percent. Both gains were the biggest since June 7. Atlanta-based Delta’s stock has climbed 58 percent this year, as the Bloomberg index has risen 42 percent.
Operating margin, a measure of income to expenses, will be 10 percent to 11 percent for the quarter ending June 30, up from a previous outlook of 9 percent to 11 percent, Delta President Ed Bastian said today at a conference hosted by Deutsche Bank in Chicago. His remarks eased concern that demand was softening after Delta, United Continental Holdings Inc. and other carriers reported May unit revenue that was little changed or lower.
“We’re coming in at the upper end of that range,” he said. “June is shaping up to be a strong quarter. The revenue environment is stable, fuel is declining.”
Demand for travel is strong and bookings in the coming months “look solid,” Bastian said. Delta is the world’s second-largest carrier by passenger traffic, behind United.