U.S. airline investors, already absorbing the worst monthly stock performance in a year, are bracing for more disappointment.

A Standard & Poor’s index of the five biggest U.S. airlines plunged about 7.5 percent in August, wiping out about $10 billion in market value. Shares fell as a price war that started between United Continental Holdings Inc. and heavy discounters spread to more carriers and markets.

Analysts see more pain ahead. Delta Air Lines Inc. on Tuesday cut its third-quarter guidance for a closely watched gauge of pricing power — revenue for each seat flown a mile — as well as for operating margin. UBS Group AG predicts the latest skirmish will force some other carriers to do the same. The trend is worrisome because the major airlines have been boasting that industry consolidation would lead to steadier profits and smoother shareholder returns, not repeated fare battles with low-cost rivals.

“We’ve taken it on the chin the last 30, 45 days, because there’s no question United started cutting fares to ward off Spirit, Frontier, whoever, and I guess it’s spread among all the airlines cutting fares,” said Gary Bradshaw, a portfolio manager at Hodges Capital Management in Dallas, which owns stakes in the major airlines. “It happened overnight almost.”

Hurricane Harvey, which shuttered Houston’s airports for several days last week, will be another drag on earnings because of flight cancellations and a spike in jet-fuel prices.

Delta’s unit revenue this quarter is now seen rising 2 percent to 3 percent, instead of the previous 2.5 percent to 4.5 percent. Operating margin is expected at 16.5 percent to 17.5 percent instead of as much as 20 percent earlier. Delta blamed “a slow recovery in domestic” ticket prices purchased close to travel and higher fuel costs linked to the hurricane a year earlier.

Delta slipped 0.6 percent at 9:59 a.m. in New York, while American fell 0.2 percent and Southwest 0.5 percent.

United and Southwest Airlines Co. will probably have to cut their third-quarter unit revenue forecasts the most, said Darryl Genovesi, a UBS analyst.

The fare battle that started this summer between United and heavy discounters like Spirit Airlines Inc. and Frontier Airlines Inc. has since spread to others, including American and Southwest. The S&P airlines index has dropped more than 14 percent since June 30.

Industry pricing declined in July from the previous month, and August “appears to have deteriorated further,” Cowen & Co. analyst Helane Becker said in a note, citing meetings with airlines last week. While carriers expect improvement in the last three months of the year compared with this quarter, “the pricing trends are currently not favorable.”

Read full originally published story at: bloomberg.com