Leading passenger and cargo carrier Delta Air Lines, Inc. (DAL) reported modest growth in traffic for Nov 2014. Results were aided by a strong performance on the domestic front. The modest increase in traffic for the month failed to please investors with the stock declining over 2% to end yesterday’s trading session at $44.67.
Strong domestic performance and the shift of the Sunday following Thanksgiving (the busiest travel day) to November this year, pulled the consolidated passenger revenue per available seat mile (PRASM) up by 4.5% year over year. More than 2.6 million passengers traveled on over 28,000 flights operated by Delta over the Thanksgiving holiday.
The company’s airline traffic – measured in revenue passenger miles or RPMs, which implies revenue generated per mile per passenger – moved up 5% year over year to 14.9 billion on the back of solid domestic data. Consolidated capacity (or available seat miles/ASMs) for the month, increased 3.6% from Nov 2013 to 18.4 billion.
The load factor, or percentage of seats filled by passengers, improved to 80.6% from 79.4% recorded in Nov 2013. The company registered a completion factor of 99.9%, with nearly 86.6% of flights on schedule.
For the first eleven months of 2014, Delta generated RPMs of 186.8 billion (up 4.3% from the corresponding period last year) and ASMs of 220.4 billion (up 3% year over year). The load factor improved 100 bps year over year to 84.7%.
Despite the not-so-impressive November traffic numbers, we believe Delta is well positioned for growth driven by a strong domestic market, capacity discipline, route expansion, cost control measures and customer-focused initiatives.
Zacks Rank
Delta currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the airline space include American Airlines Group Inc. (AAL), Spirit Airlines (SAVE) and Southwest Airlines Co. (LUV). All these stocks sport a Zacks Rank #1 (Strong Buy).
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