Mar 6, 2017

Airline stocks fall after Delta struggles to raise prices

Delta airlines told investors Monday that its revenue per passenger mile will not rise this quarter, an indication that airlines are struggling to raise prices despite recent consolidation in the industry. NYSE's Airline index fell more than 2.5% during trading Monday.

Why it matters: Warren Buffett long pledged to never invest in the airline industry, because the sector has notoriously struggled to stay profitable. But Buffett's Berkshire Hathaway recently admitted that it has bought up billions in American Airline stocks in recent months on the belief that competition in the industry has been reduced enough to start giving airlines the power to raise prices without losing customers. The theory hasn't panned out thus far, but the industry is laser-focused on this metric, so stay tuned.

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