Share “Delta shares fall after June traffic report”

Delta shares fall after June traffic report

Published on NewsOK Modified: July 2, 2014 at 2:53 pm •  Published: July 2, 2014

DALLAS (AP) — Shares of major U.S. airlines slumped Wednesday after Delta Air Lines Inc. said that too many flights on some international routes cut into revenue growth.

Airlines usually increase passenger-carrying capacity by adding flights. Investors worry that fares and profits can fall if the supply of seats on lucrative international routes outstrips travel demand, as has happened before in the airline industry.

Shares of Delta, the nation's third-largest airline company by traffic, dropped $2.13, or 5.3 percent, to $38.18 in late afternoon trading. Shares of United lost 6.2 percent and American Airlines fell 5 percent.

Delta said that last month's passenger revenue for each seat flown one mile rose 4.5 percent over June 2013. That figure rises when airlines fill more seats or sell them at higher average fares, and June's increase could have been seen as an indication that travel demand and airline pricing power remained strong at the start of the peak summer travel season.

But it was a letdown after Delta's 7 percent increase in the measure in May. J.P. Morgan analyst Jamie Baker said investors expected 6 percent growth in June. Delta said that corporate and U.S. travel remained strong in June but revenue per mile was hurt by a dip in business travel to Latin America during the World Cup soccer tournament and because airlines added capacity on international routes.

Delta's comments came three weeks after Deutsche Lufthansa AG cut its forecast for 2014-2015 earnings. The German carrier said that excess capacity from Persian Gulf airlines was causing prices to fall on trans-Atlantic routes.

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