Leading passenger and cargo carrier
Delta Air Lines Inc.
) reported growth in traffic for April 2014 on the back of strong
demand in both the domestic and Latin American markets. Passenger
revenue per available seat mile (PRASM) improved 6.0% year over
year. The shift of Easter to April this year has positively
impacted its April PRASM.
The company's airline traffic - measured in revenue passenger
miles or RPMs, which imply revenue generated per mile per
passenger - moved up 7.1% year over year to 16.57 billion.
Consolidated capacity (or available seat miles/ASMs) for the
month, increased 3.0% from April 2013 to 19.57 billion.
The load factor or percentage of seats filled by passengers
leaped 290 basis points (bps) from April 2013 to 84.7%. The
company registered a completion factor of 99.9%, with nearly
85.2% of flights on schedule.
For the first four months of 2014, Delta generated RPMs of
61.17 billion (up 4.3% from the corresponding period last year)
and ASMs of 73.48 billion (up 2.0% year over year). The load
factor improved 190 bps year over year to 83.3%.
In 2014, Delta is expected to generate higher revenues than
last year on strong domestic market, capacity discipline, route
expansion, cost control measures and customer-focused
initiatives. Consequently, investors can look forward to higher
returns from this well-placed carrier.
Further, Delta is reaping the benefits of its tie up with
Virgin Atlantic as it is picking up in the lucrative New
York-London travel route. Owing to its widened network in the
U.S. and Europe, Delta-Virgin passengers will now have more
flight options from New York and London, which will thus
strengthen the prospect of the joint venture.
However, the mega merger between American Airlines and U.S.
Airways Group to form
American Airlines Group Inc.
) and the subsequent divestment of slots to
Southwest Airlines Co.
JetBlue Airways Corp.
) remains a major competitive threat for the company.
Delta presently carries a Zacks Rank #2 (Buy).
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