Delta Air Lines Inc. DAL posted healthy air traffic numbers in the month of June. Traffic – measured in revenue passenger miles (RPMs) – stood at 19.6 billion, up 3.2% from 19 billion recorded in the comparable month a year ago.
On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) inched up 2.6% to 22.3 billion. Meanwhile, the load factor or percentage of seats filled by passengers increased to 88.1% in the month from 87.5% a year ago. Load factor stood at 88.1% against 87.5% in June 2014.
At the end of the first half of 2015, Delta generated RPMs of 101 billion (up 3.1% from the first half of 2014) and ASMs of 120.5 billion (up 4.2% year over year). Likewise, passenger count in the month grew 4.6% while that for the first six months of this year rose 4.1%.
However, Delta witnessed a 4.5% drop in PRASM (passenger revenue per available seat mile) in the month mainly impacted by volatile foreign currency exchange rates and lower surcharge from international destinations. Moreover, reduced passenger yields (average fare paid per mile per passenger) from domestic markets affected PRASM.
Delta expects second-quarter 2015 operating margin in the range of 15.5%–16.5% in comparison to 15.1% in the second quarter of 2014. The company expects cargo and other revenues at around $1.5 billion and average fuel price per gallon in the range of $2.40 to $2.45.
Recently, Delta decided to upgrade its operations at New York's John F. Kennedy (JFK) International Airport and prime destinations in the West Coast viz. Los Angeles (LAX) and San Francisco (SFO). The Atlanta GA-based carrier stated that it will add one daily flight to its current operational number of nine flights on the JFK-LAX route from Nov 2015.
Delta’s significant route expansion plans, introduction of ancillary products, fleet revamping and customer service enhancement bode well for the future. Further, the company has been reaping considerable benefits from its joint ventures and code share agreements.
Stocks to Consider
Delta currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same space are Deutsche Lufthansa Aktiengesellschaft DLAKY, SkyWest Inc. SKYW and Cathay Pacific Airways Limited CPCAY. All these stocks sport a Zacks Rank #1 (Strong Buy).
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