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Delta Blames Sequester for Low Demand

By Justin Loiseau - Apr 2, 2013 at 6:46PM

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The airline lowers key Q1 guidance.

Delta Air Lines (DAL 6.68%) blamed the sequester for lower close-in bookings in March, according to an SEC earnings report filed today. According to the report, most of Delta's unit revenue increases came from its trans-Atlantic and Latin offerings, while a weakening yen shrunk Pacific purchases. Although unit revenues managed a 2% year-over-year increase in March, the airline felt the squeeze on several fronts:

Reason

Cause

Lower close-in bookings

Sequestration

Lower-than-expected demand

Delta's attempt to boost yields

"Temporary inefficiencies"

Implementation of new revenue management technology

Source: SEC.gov. 

As a result, Delta has lowered its Q1 2013 unit revenue guidance from a 4.5%-5.5% year-over-year increase to a 4%-4.5% bump. Although it expects a profitable quarter with stable operating margins, this news comes as a blow to Mr. Market's expectations for the company. As of this writing, shares are down 7.26% for the day.

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