Airline stocks fall on expansion talk

Airline stocks fall on expansion talk

By Howard Dicus - bio | email

ATLANTA (HawaiiNewsNow) - It scared stock traders focused on airline profits, but Hawaii stands to benefit from airlines rebuilding capacity, and Delta Air Lines said Monday it will do.

Delta, reporting higher profits for the second quarter, said it planned to increase capacity 1% to 3% next year. Those small-looking numbers would be a lot of extra seats for the world's biggest airline.

Delta stock fell 3% on the news, dragging other airline stocks along, because traders feared that capacity expansion would lead to more competition and more competition would lead to lower fares.

The sell-off subsided after airline analysts pointed out that Delta had been the most aggressive of the major carriers is cutting back capacity during the downturn, so it had further to go in restoring capacity.

For Hawaii, the more seats, the more people can come visit. Added capacity without fare cuts would still help tourism, and added capacity with fare cuts would help more.

Delta, now encompassing the former Northwest Airlines, flies to Hawaii from Los Angeles, Atlanta, Seattle, Minneapolis, Detroit and other cities, and has service to Hawaii from Japan as well.

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