Delta drags down airlines after fuel cost spurs cut to forecast

Bloomberg

Delta Air Lines Inc. dragged down US airlines after the carrier trimmed its profit outlook, citing the rising price of jet fuel.
Second-quarter earnings will be no more than $1.75 a share, Delta said in a statement. That’s down from a previous forecast of as much as
$2 a share.
Fuel prices have risen about 12 percent since the beginning of the quarter, and fares typically take six months to a year to catch up, the No. 2 US airline said. Delta cut its forecast six weeks after a similar move by American Airlines Group Inc., the world’s biggest carrier.
Other airlines are likely to follow suit, said Adam Hackel, an analyst at Imperial Capital. “You’ll certainly see over the next week or two some more revisions as they get fuel fully priced in,” he said.
Delta’s decline was the sharpest on a Standard & Poor’s index of five major US airlines, which dropped 2 percent — the second-biggest drop among industry groups on the S&P 500 Index.

Seat Supply
The carrier said it would make a decision within the next month on seating capacity for the fall. Paring the supply typically enables airlines to raise fares, assuming demand remains strong. The Atlanta-based airline maintained its prediction for an increase in capacity of no more than 4 percent this quarter.
While airlines won’t trim seats during the busy summer travel season, “there’s still enough time for them to look at it after Labor Day, when you really hit a pretty dramatic off-peak period for this industry,” Hackel said.