Delta Air Lines’ profit miss on higher fuel costs clouds strong forecast
Delta Air Lines (DAL.N) on Thursday forecast higher-than-expected profit for the current quarter, citing “record” bookings for summer travel, even as the carrier missed first-quarter profit estimates due to higher fuel and labor costs.
Shares of the carrier were initially up about 4%, but fell 3% in morning trade as investors parsed through the results for cues on risks to demand from rising costs. Rivals American Airlines and United Airlines were down about 1%.
Delta Chief Executive Ed Bastian, in an interview with Reuters, said fuel price volatility and bad weather affected the company’s performance in the first quarter.
American Airlines (AAL.O) on Wednesday forecast first-quarter profit below market expectations, joining rival United Airlines (UAL.O) in signaling a hit from higher costs.
U.S. carriers have tried to leverage travel demand with higher ticket prices to offset rising labor and fuel bills. But investors fear that any pullback in travel spending would hurt airline profits.
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