According to Bloomberg, U.S.-based carrier Delta Air Lines, Inc. (DAL) has decided to operate 20% lesser flights to the African nation of Ghana. Notably, the airline has multiple flights operating to and from Africa.
According to the report, Delta has cut down the number of trips to Ghana’s capital Accra from New York’s John F. Kennedy International Airport to 18, as opposed to the year-ago figure of 22, beginning last month. The carrier has started operating one less flight per week on the above mentioned route.
Ebola Weighing on Profitability
Even though Delta did not cite any specific reason for slashing the number of flights to Ghana, we believe the decision has been considerably influenced by the formidable prevalence of Ebola in Africa, particularly in the western region of the continent. In fact, this is not the first time that Delta has pulled the plug on flights bound for West African cities. The carrier does not operate flights to Monrovia, the capital of Liberia, since August this year, according to the report. Liberia has been badly hit by the outbreak of Ebola.
We believe that the widespread occurrence of Ebola has led to the slackening of air traffic to nations, particularly in West Africa. This has naturally hurt profitability for airline companies, and has made flying to the affected areas economically unviable. We suspect that Delta’s decision to reduce flights to the West African destinations is a natural outcome of the above concern. We note that Delta, however, does not fly to the worst Ebola-affected areas of Sierra Leone and Guinea.
Ebola has been wrecking havoc and claiming multiple lives, ever since its latest outbreak this year. According to media reports, this is the worst outbreak since the disease first surfaced in 1976.
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, Inc. (SAVE) and Hawaiian Holdings Inc. (HA). All three stocks sport a Zacks Rank #1 (Strong Buy).
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