Delta Mar Traffic Dull, Trims 1Q Rev - Analyst Blog


Leading U.S. passenger carrier Delta Air Lines ( DAL ) witnessed stagnancy in traffic in Mar 2013, due to lackluster regional performance, partially offset by better results in Latin America.

The company's airline traffic - measured in revenue passenger miles or RPMs, which implies revenue generated per mile per passenger - remained nearly flat year over year at 16.5 billion. Consolidated capacity (or available seat miles/ASMs) for the month fell a marginal 0.6% from Mar 2012 to 19.4 billion.

The load factor or percentage of seats filled by passengers, however, went up 60 basis points from the third month of 2012 to 84.7%. Passenger revenue per available seat mile (PRASM) improved 2.0% year over year, supported by efficient operations in the Transatlantic region. The company registered a completion factor of 99.3%, with nearly 84.9% of the flights on schedule.

For the first three months of 2013, Delta generated RPMs of 43.1 billion (down 0.6% year over year) and ASMs of 53.0 billion (down 2.6% year over year), while load factor was 81.2%, up 150 basis points.

Although traffic results for the first three months of 2013 failed to impress, Delta expects to witness a profitable first quarter, with unit revenue growth of 4% to 4.5%. The present forecast, however, is lower than the earlier guidance of 4.5% to 5.5%.

Operating margin expectation remains unchanged at 2.5% to 3.5%, indicating an increase from the prior-year quarter. Although the company expects non-fuel unit costs in the first quarter to increase 5-6% year over year, the projection has improved from the one given previously. Delta's consistent efforts to reform its cost structure amid the present economic scenario seem to be paying off.  

Delta - the second largest airline company in the U.S. after United Continental Holdings Inc. ( UAL ) - is in constant endeavor to expand its operational base and provide better customer experience.

Last month, Delta expressed intentions of adding new flights between the U.S. and Brazil, to capitalize on the growing market demand between these routes. The company is also planning to increase the number of flights at Los Angeles' international airport with daily year-round and seasonal services.

Delta competes with the likes of Southwest Airlines Co. ( LUV ) and JetBlue Airways Corp. ( JBLU ) and carries a Zacks Rank #3, implying a Hold rating.

DELTA AIR LINES (DAL): Free Stock Analysis Report

JETBLUE AIRWAYS (JBLU): Free Stock Analysis Report

SOUTHWEST AIR (LUV): Free Stock Analysis Report

UNITED CONT HLD (UAL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: DAL , JBLU , LUV , UAL

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