By Dimitra DeFotis
Word from several airlines Tuesday shows rising jet fuel costs are pinching first quarter results.
But shares were mostly rising on a very good day for the market.
Delta Air Lines (DAL) said demand remains strong, but it cut its first-quarter margin guidance at a conference Tuesday. It is offering early retirement and severance to employees. Analysts at Dahlman Rose see Delta losing money in the first quarter, the weakest of the year.
Dahlman Rose sees the following for Delta:
- 1Q12, loss of 5 cents, down from a prior estimate of profit of 5 cents, vs consensus loss of 2 cents
- 2012: EPS unchanged at $2.20 per share vs consensus of $2.26.
- 2013: EPS unchanged at $2.40 per share vs consensus of $2.52.
The CFO at Southwest Airlines (LUV), Laura Wright, highlighted fuel prices as a cause for concern.
“This fuel increase is a significant hurdle for us to overcome, and based on the current revenue and fuel estimates, we currently do not anticipate a profit in the first quarter,” she said.
United Continental Holdings (UAL) trimmed its guidance for capacity, which it said will fall by 0.5% to 1.5%. It had previously predicted a higher range: between a rise of 0.5% and a decline of 0.5%.
Shares of Delta were up 0.54%, or 5 cents, to $9.24. Southwest stock was up more than 1%, or 10 cents, to $8.38, while United Continental shares were flat at around $19.60.