By Ankit Ajmera and Tracy Rucinski
(Reuters) - Delta Air Lines Inc (N:DAL) on Tuesday posted a slight beat in fourth-quarter profit but forecast a decline in revenue growth in the first quarter, hit by a partial government shutdown and worries about whether airlines can raise fares in an uncertain global economy.
Delta, the No. 2 U.S. airline, warned that revenue per mile flown would be hurt in the current quarter by the timing of Easter, increasing foreign exchange headwinds, and the ongoing U.S. government shutdown, which entered its 25th day on Tuesday.
Travelers (NYSE:TRV) are enduring long airport lines as an increasing number of security screeners are not showing up for work during the shutdown, and airlines face delays in federal certification for new routes and aircraft.
Delta Chief Executive Officer Ed Bastian said the partial shutdown will cost $25 million per month in reduced government travel.
JP Morgan analyst Jamie Baker calculated that Delta generates about $475 million in annual revenue through negotiated government fares. The company's first-quarter target for unit revenue, a closely watched metric of revenues per mile flown, could be at risk if the shutdown drags on past January, Baker added.
Baker's estimate does not include the impact of the shutdown on leisure travel by affected government employees. Delta operates around 86 daily flights from Washington-area airports.
Delta said unit revenue will range between flat to 2 percent higher in the first quarter, compared with 3.2 percent growth in the fourth quarter ended Dec. 31.
Analysts warned that overall corporate travel will be impacted by the shutdown and replaced with lower-yielding leisure travel.
Delta forecast first-quarter earnings between 70 cents and 90 cents per share, below analysts' estimate of 94 cents, according to IBES data from Refinitiv.
Both Delta and larger rival American Airlines Inc (O:AAL) lowered estimates earlier this month for fourth-quarter revenue per available seat, raising concerns that an economic deceleration was hurting business travel. The forecasts sent their shares sharply lower.
On an adjusted basis, the airline earned $1.30 per share in the fourth quarter, above the $1.27 per share expected by analysts.
Total operating revenue rose 5 percent to $10.74 billion, in line with the Wall Street estimate.
Shares rose 0.1 percent to $47.80.