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Delta Warns Government Shutdown Will Affect Travel Demand and Airfares

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.