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Delta Air Lines' (DAL) July Traffic & Load Factor Increase

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Shares of Delta Air Lines, Inc. (DAL - Free Report) have been struggling ever since it reported lower-than-expected second-quarter revenues and earnings per share last month. In fact, the stock has declined 7.9% in the last one month compared with its industry’s fall of 4.9%.

 

Amid this gloomy backdrop, this Atlanta, GA-based company received good news when it reported encouraging traffic data for the month of July.Consolidated traffic – measured in revenue passenger miles (RPMs) – came in at 21.73 billion, up 2.7% year over year. The upside was driven by a 4.8% increase in domestic RPMs.

In fact, consolidated capacity (or available seat miles/ASMs) expanded 1.5% to 24.65 billion on a year-over-year basis. However, the metric declined 1% on the international front mainly due to a 6.9% reduction in the metric in the Pacific area.

Consolidated load factor, or percentage of seats filled by passengers, improved 100 basis points to 88.1%. This is because traffic growth outweighed capacity expansion in July leading to packed planes. Additionally, the airline recorded an 83.1% on-time performance and 99.9% completion factor (mainline) for the same month.

At the end of the first seven months of 2017, Delta generated consolidated RPMs of 127.6 billion (up 1.6% year over year) and ASMs of 148.75 billion (up 0.2% year over year). Notably, load factor was 85.6%versus 84.4% recorded in the same period last year.

Apart from the traffic report, Delta was also in the news recently when it announced its decision to invest €375 million in Air France-KLM SA (AFLYY - Free Report) , thereby strengthening its ties with the latter.

In fact, Delta has been constantly looking to expand its operations. To this end, the carrier recently announced its intention to launch non-stop flights connecting Atlantaand Shanghai. The new service will be operational from July next year.

Zacks Rank & Key Picks

Delta currently sports a Zacks Rank #1 (Strong Buy). Investors interested in the airline space may also consider United Continental Holdings, Inc. (UAL - Free Report) and Ryanair Holdings plc (RYAAY - Free Report) carrying the same rank as Delta. You can see the complete list of today’s Zacks #1 Rank stocks here

The expected earnings per share growth rate (for the next three to five years) at United Continental is 6.14%. The Zacks Consensus Estimate for current year earnings has moved up 3.2% to $7.75 per share over the last 30 days at Ryanair.

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