Delta Air Lines Inc. (DAL - Analyst Report) has signed an agreement with leading global travel distribution services and e-commerce provider, Travelport. Per the deal, Delta will be able to obtain data and intellectual property rights integral to its passenger service and flight operations systems.
The pact will make Delta the only U.S. carrier enjoying the rights to directly control these technology systems offered by Travelport, thus enabling enhanced travel experiences for its customers. No financial terms and conditions of the deal were, however, disclosed.
The agreement terms as stated in the press release incorporate transfer of direct control and operations of passenger service systems and flight operations of Delta. The system infrastructure will continue to be run by Travelport at its Atlanta data center; however, over 175 of its technology professionals will be transferred to Delta with effect from July 1. Notably, the new deal will have no effect on the existing Global Distribution Systems pact between the companies already renewed in 2013.
Delta is progressing well on improving ancillary revenues by enhancing its services as well as introducing products to improve passenger satisfaction and experience, both in air and on ground. In an attempt to enhance its fleet structure, amenities, products and technological base, Delta aims to invest $2.0–$2.5 billion annually, over the next five years. The company has recently initiated services from Terminal 4 at New York's John F. Kennedy (JFK) International Airport.
In the coming months, Delta will continue to upgrade facilities at the JFK hub, along with investment of $229 million to renovate Terminal 5 at Los Angeles International Airport. Delta has completed the installation of full-flatbed and business elite seats on long-haul flights and is the sole U.S. carrier at present to offer this on-demand entertainment service. The carrier expects to invest $750 million over the next two-year period to roll out in-flight Wi-Fi services as well as renovate the interiors of its narrow-bodied aircraft over the next three years. These investments will extend the quality and longevity of Delta’s fleet, thus postponing the need for aircraft purchase, in turn, reducing the carrier’s capital expenditure.
Delta currently sports a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Other stocks sporting a Zacks Rank #1, worth considering in this sector, include Alaska Air Group, Inc. (ALK - Snapshot Report), American Airlines Group Inc. (AAL - Analyst Report) and Era Group Inc. (ERA - Snapshot Report).