Delta's Revenue Forecast Shrinks for the Fourth Quarter

I briefly mentioned it earlier this week, but I think Delta’s fourth quarter unit revenue forecasts are worth discussing further. Demand is down all over, and Delta has really quantified it with this latest guidance.

Delta had previously expected to see unit revenue increase between 8 and 10 percent during the fourth quarter. This increase was primarily expected due to the massive decrease in capacity year over year. That tightened capacity was expected to lead to much higher fares. That may no longer be the case.

The airline is now saying that it expects unit revenue to increase between only 2 and 4 percent. There are two reasons this number could be lower. One is that they expect fewer seats to be filled while the other is that people will be paying less, or a combination of the two of course.

October load factors were up 2 percent across the Delta system, so unless traffic has fallen off a cliff (which it may have), we’re looking at pricing pressure caused by the down economy. We’ll see how this plays out, but I can guarantee that all eyes will be on fourth quarter earnings reports when they come out in the new year.