UPDATE: Airline stocks jump after Delta's 'positive' outlook on pricing
By Tomi Kilgore, MarketWatch
Airline index rises to two-month high as Delta's stock surges over 6%
Airline stocks surged Tuesday, after Delta Air Lines Inc.'s "positive" September results and outlook helped fuel a broad rally in the sector.
Delta's stock (DAL) shot up 6.6%, the biggest one-day percentage gain since January 2015. Trading volume reached 16.1 million shares, compared with the full-day average of 8.3 million shares.
Delta said before the open that September load factor declined to 84.4% from 84.6%, as a 0.6% increase in capacity outpaced 0.3% growth in traffic. The air carrier said in the wake of Hurricanes Irma and Maria, it now expects third-quarter adjusted operating margin in the range of 15.5% to 16.5%, down from guidance provided a month ago of 16.5% to 17.5%.
But Cowen & Co. analyst Helane Becker reiterated her outperform rating, saying margin deterioration resulting from Hurricanes is an industry issue, and will soon be in the past. Therefore, she said she believes excluding the hurricanes, Delta's overall guidance was "positive," and suggests pricing trends could be stabilizing.
"Investors remain focused on the pricing environment, and Delta's guidance this morning should calm some fears that pricing is still under pressure," Becker wrote in a note to clients.
The NYSE Arca Airline Index climbed 4.1% to the highest close since July 26. It has soared 9.6% since closed at a nine-month low on Aug. 24. The index is still 7.4% below the 16-year high reached on July 17.