Leading passenger and cargo carrier Delta Air Lines Inc. (DAL - Analyst Report) reported growth in traffic for Feb 2014 on the back of strong domestic demand and gains in the trans-Atlantic joint venture. Passenger revenue per available seat mile (PRASM) improved 4.0% year over year. As a result of winter storms, Delta had to cancel 8,000 flights during the month that contributed a 0.5% increase in PRASM.
The company’s airline traffic – measured in revenue passenger miles or RPMs, which imply revenue generated per mile per passenger – moved up 2.4% year over year to 12.99 billion. Consolidated capacity (or available seat miles/ASMs) for the month, decreased 0.3% from Feb 2013 to 16.00 billion.
The load factor or percentage of seats filled by passengers leaped 210 basis points from Feb 2013 to 81.2%. The company registered a completion factor of 99.5%, with nearly 77.5% of flights on schedule.
For the first two months of 2014, Delta generated RPMs of 27.48 billion (up 3.3% from the corresponding period last year) and ASMs of 33.84 billion (up 0.8% year over year). The load factor improved 200 basis points year over year to 81.2%.
In 2014, Delta is expected to generate higher revenues from last year on a strong domestic market, capacity discipline, cost control measures and customer-focused initiatives, thus enhancing shareholders return.
Further, the company’s joint venture with Virgin Atlantic Airways has already started and is expected to augment Delta’s presence in the top 10 U.S. to Europe destinations and will represent 25% of the seats between U.S. and Heathrow travel routes.
However, the mega merger between American Airlines and U.S. Airways Group to form American Airlines Group Inc. (AAL - Analyst Report) remains a major competitive threat to the company in both domestic and international markets.
Delta carries a Zacks Rank #3 (Hold). Better-ranked stocks within the industry include Southwest Airlines Co. (LUV - Analyst Report) and JetBlue Airways Corp. (JBLU - Analyst Report). LUV carries a Zacks Rank #1 (Strong Buy), while JBLU carries a Zacks Rank #2 (Buy).