Delta Air Lines reported earnings this morning, the first airline to report earnings for the second quarter.
While the headline numbers for the airline’s results look quite good on the surface — airline stocks began to drop after the numbers were released and they have yet to get up again.
Why is this the case — if Delta reported such a large profit?
If you are a PlaneBusiness Banter subscriber, you might have a good idea. As I said three weeks ago, I think a lot of this recent giddyness concerning the “return” of airline revenues is, I believe, on shaky ground.
Yes, no question that the second quarter numbers should be good across the board for the sector — with one glaring exception. The only major airline that will probably post a loss for the quarter is AMR, parent of American Airlines.
But as I talk about in this week’s PBB, we are now seeing a number of economic metrics that are pointing toward a recessionary recovery in the U.S. that is running out of steam.
Take those developments, coupled with the fact the airline industry is now looking at the start of a traditionally slow period in September — throw on results from Delta that disappointed on the revenue side — and poof. A perfect recipe for an airline sector selloff.
Now you know.