Delta Air Lines warned that its ability to raise fares is likely to slow this quarter as the U.S. government shutdown weakens travel demand, adding pressure to the carrier as a rising industry seat supply weighs on ticket prices.
Revenue from each seat flown a mile will rise no more than 2% this quarter from a year earlier, Delta (DAL) said as it reported earnings Tuesday. That pricing-power gauge, also known as unit revenue, climbed 3.2% in the final three months of last year.
Early first-quarter bookings are down across the industry, as tracked by Buckingham Research Group, signaling pressure from the shutdown. Delta, as the first major U.S. airline to report results, is a barometer for a particularly fraught earnings season; the carrier and American Airlines Group Inc. recently issued weak outlooks. United is scheduled to report earnings later Tuesday. First-quarter adjusted profit will be 70 cents to 90 cents a share, Delta said. Even at the upper end, that trailed the 93-cent average of analyst estimates compiled by Bloomberg.
Delta fell 1.6% to $46.99 before the start of regular trading in New York. The shares dropped 11% in 2018, while a Standard & Poor’s airline index dropped 17%.
The company reaffirmed its 2019 forecast for earnings of $6 to $7 a share. Fourth-quarter adjusted earnings of $1.30 a share topped analysts’ expectations of $1.28.