Back to top

Analyst Blog

Leading U.S. passenger carrier Delta Air Lines (DAL - Analyst Report) 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 - Analyst Report) – 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 - Analyst Report) and JetBlue Airways Corp. (JBLU - Analyst Report) and carries a Zacks Rank #3, implying a Hold rating.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%