Airline behemoth Delta Air Lines, Inc. DAL announced disappointing traffic numbers for the month of February. Passenger unit revenue (PRASM, a product of passenger yield and load factor) declined 1.5% on a year-over-year basis, hurt by adverse foreign currency movements. In particular, a strong dollar negatively impacted international results for the month. A turbulent winter also led to the decline in the key revenue metric.
Airline traffic, measured in revenue passenger miles, went up 5.1% year over year to 13.66 billion on a consolidated basis. Domestic traffic climbed 7.2% in the month, while the same on the international front was up 1.9%.
Consolidated capacity or available seat miles improved 6.3% to 17 billion. Load factor (% of seats filled with passengers) stood at 83% for domestic flights, flat year over year. However, the metric declined 250 basis points (bps) to 76.2% for the month on international flights. Consolidated load factor was down 90 bps to 80.3%. The company registered a completion factor of 97.5%, with nearly 78% of flights on schedule.
Despite the not-so-impressive February 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. A few days back, Delta inked a next-generation technology deal with in-flight connectivity provider Gogo Inc. GOGO. According to the deal, Gogo’s next generation 2Ku technology will be installed in more than 250 of Delta’s planes.
With Delta having reported a below par PRASM figure for February, hurt by foreign exchange, it remains to be seen if the same impacts the monthly traffic numbers for other carriers like United Continental UAL and American Airlines Group AAL.
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