(Reuters) -Delta earnings forecast a lower-than-expected profit for the third quarter. Discounting pressure in the low-end market dampened its pricing power. This news sent the company’s shares down 9% before the bell on Thursday.
The Atlanta-based carrier also reported a hit to transatlantic bookings as travelers are avoiding Paris due to the Olympic Games this summer. #DeltaEarningsForecast
Delta shares were trading at $42.70, while rivals United Airlines and American Airlines were down nearly 5% each.
Domestic peer Southwest Airlines was also down 2.3%, while European rivals Lufthansa and British Airways owner IAG fell between 1% and 2%.
Delta forecast an adjusted profit between $1.70 and $2.00 per share in the third quarter through September compared with analysts’ expectations of $2.05, according to LSEG data.
Airlines are enjoying a summer travel boom, with more than 3 million people passing through U.S. airport security checkpoints in a single day on July 7.
The boom has failed to lift earnings at most of the U.S. carriers as excess industry capacity has undermined pricing power. Major airlines have scheduled about 6% more seats in the domestic market this month than a year earlier, data from consultancy Cirium shows. #DeltaEarningsForecast
Average round-trip ticket price for a U.S. domestic flight was $543 in May, down 1% month-on-month and 3% lower from a year earlier, according to data from Airlines Reporting Corporation (ARC).
American Airlines and Southwest have cut their revenue forecasts in the second quarter, citing discounting pressure.
Furthermore, Delta earnings forecast serves as a wake-up call. The airline industry faces ongoing volatility. Therefore, companies must adapt quickly. They need to stay ahead of economic pressures and market fluctuations. This approach is crucial for sustained growth and stability in the future.
