Delta's upbeat first-quarter profit estimate lifts shares
Delta Air Lines Inc shares rose 7 percent on Tuesday after the No.2 U.S. airline raised its first-quarter profit estimate on the back of strong business travel demand.
The news boosted shares of rivals, with United Airlines, American Airlines and Southwest Airlines Co all up between 1 percent and 3 percent in morning trading.
Delta`s announcement could soothe some nerves as investors were expecting the groundings of Boeing 737 MAX jets, a U.S. government shutdown and more-than-expected outages to pressure profits in the industry.
The quarter started with the longest shutdown in U.S. government history and ended with worldwide groundings of Boeing jets. This led to widespread cancellations in travel plans, with several airlines warning of a potential hit.
Last month, Southwest Airlines cut its financial outlook for the year after being forced to pull its new fleet of 34 Boeing 737 MAX planes out of service.
On Tuesday, Atlanta-based Delta said it expects first-quarter profit of 85 cents to 95 cents per share, compared with its earlier forecast of 70 cents to 90 cents per share. Analysts currently expect earnings of 80 cents per share.
Delta also estimated capacity to be up 5 percent in the March quarter and sees a bump of about 2 percent to its total revenue per available seat mile, a closely followed measure of an airline`s performance.
The airline said it now expects operating revenue for the first quarter to rise about 7 percent, compared with the 4 to 6 percent rise it had forecast earlier.
As of Monday`s close, Delta shares have risen about 4 percent to $52.2 this year.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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