Delta Air Lines Inc (DAL) on Wednesday reported that an important revenue measure rose less than its forecast in June due to international weakness, sending U.S. airline stocks lower.
Delta shares fell 5.6 percent to $38.07 as carriers with global networks took the brunt of the stock market hit. American Airlines Group Inc slid 5.1 percent to $41.64, and United Continental Holdings Inc sank 6.6 percent to $39.44.
Delta said passenger revenue per available seat mile increased 4.5 percent in June, trailing its forecast calling for an increase of as much as 7 percent. While U.S. results were solid, Delta noted that business demand was lower to Latin America in light of the World Cup soccer tournament in Brazil and industrywide capacity increases that hurt ticket prices.
Delta's capacity - a measure of seats available to generate revenue - to Latin America rose 23.5 percent in June from a year earlier while capacity on European routes rose 1 percent. Its Pacific capacity fell 0.6 percent in June.
Delta's traffic rose 20 percent in Latin America, but fell 1.3 percent and 2.5 percent in Europe and Asia, respectively.
Raymond James airline analyst Savanthi Syth said increased flying on trans-Atlantic routes was more pronounced among European carriers. "We'll have to see if the carriers that are flying on those routes adjust capacity correctly," Syth said.
German carrier Lufthansa cited "overcapacity" in Europe last month when it cut profit targets.
Syth said Latin America weakness, due to businesses there curbing travel during the World Cup, would likely subside in the second half of July.
In early May, Delta told a Bank of America Merrill Lynch conference that unit revenue for May and June would likely rise in the range of 6 percent to 7 percent. Its unit revenue, a measure of pricing power and how full planes are, rose 7 percent in May.
Delta said unit revenue rose 6 percent in the second quarter, in line with a late-April forecast.
The second quarter is typically strong for airlines, which benefit from some vacation travel.
"Forward bookings for July and August are still quite strong, and pricing in the domestic market remains strong," Cowen & Co analyst Helane Becker said in a note to clients.
Among other U.S. airlines, Southwest Airlines Co dipped 0.6 percent to $27.56, and low-cost operator Spirit Airlines Inc was down 1.2 percent to $64.01.
(Reporting by Karen Jacobs in Atlanta; Editing by Marguerita Choy and Jeffrey Benkoe)