On Monday, Delta said that it expects flat passenger revenue per available seat mile in the current quarter. U.S. airlines have been struggling to boost this metric because it's an indication of an airline's ability to raise fares. Delta had initially expected the metric to come in at 2%, after two years of declines.
Also, the airline lowered its operating profit margin forecast, to 10% to 11% from 11% to 13%
The company's stock fell more than 1.82% to $47.96 Tuesday afternoon. And other airlines have been dragged down, as well. Southwest Airlines LUV,United Continental(UAL) - Get ReportAmerican Airlines(AAL) - Get Report all fell about 1%.
Although the airline industry is currently facing headwinds, that doesn't mean these aren't great long-term plays for investors. Any dip in share prices should be considered an opportunity to get in.
Delta is expecting its metrics to improve after this quarter. "The good news is we do expect this to be the trough for the full year in terms of year-over-year margin performance," the company's chief financial officer, Paul Jacobson, told attendees at a Raymond James Financial conference on Monday morning. "And while unit revenues are tracking on the low end of our original guide, at flat versus up 0% to 2%, we still believe that we're on that trajectory."
Indeed, flat growth is an improvement after two years of loss.
Just as travelers must "hurry up and wait" when it comes to boarding flights, investors need to be patient with the airline industry. Increased fuel prices - as well as concerns over Trump's proposed travel ban and a new batch of competing discount carriers - have created headwinds for the industry.
However, like all turbulence, the difficulties appear likely temporary. And these stocks are great for the long term. Just ask Warren Buffett, who surprised many pundits by revealing that his Berkshire Hathaway(BRK.A) - Get Report had taken sizable positions in all four.
However, if you're looking for the potential for some quick profit bursts from an airline, check out Spirit Airlines SAVE. Among the ranks of the low-cost carriers, Spirit has been working hard to revamp its business and add value. Its stock has been taking a bumpy ride - so far this year, it's down by more than 10%. But last year it clocked 45% gains - a trend that should continue as the forecast for airlines improves.
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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.