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Delta Air Lines' (DAL) August PRASM Hit by Power Outage
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Delta Air Lines (DAL - Free Report) revealed dismal traffic numbers for the month of August. Revenue passenger miles (RPMs: a measure of air traffic) declined 2.8% to 20.22 billion on a consolidated basis. Weakness in both domestic and international traffic hurt the metric.
Average seat miles (ASMs: a measure of capacity) grew marginally (0.5%) to 23.95 billion on a consolidated basis. Load factor (% of seats filled by passengers) declined 290 basis points to 84.4% in the month as capacity expanded while traffic contracted leading to empty planes. The company registered a completion factor (mainline) of 98% with 79.9% flights on schedule in the month.
The airline behemoth witnessed a 9.5% decline in consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenue). The metric was mainly hurt due to the power outage suffered by the company in August. The outage crippled operations resulting in 2,300 flights being cancelled over a three-day time span.
The severity of the disruptions can be gauged from the fact that the Atlanta, GA-based carrier recorded $100 million less in its August revenues. PRASM was negatively impacted by the outage to the tune of 2 percentage points which caused undue harassments to several passengers. Apart from the outage, other factors that hit unit revenues were declining airfares, the supply-demand imbalance in the Transatlantic, apart from the headwinds related to its Yen hedge positions.
In the first eight months of 2016, Delta generated RPMs of 145.5 billion (down 2% year over year) and ASMs of 172.3 billion (up 2.5%), leading to a total load factor of 84.4% (down 50 bps).
Zacks Rank & Key Picks
Delta currently carries a Zacks Rank #5 (Strong Sell). The bearish rank is attributable to the multiple headwinds, including PRASM woes, being faced by the carrier. The company has seen its stock price go down over 26% on a year-to-date basis.
With Delta continuing to disappoint, investors interested in the airline space may consider ANA Holdings Inc. (ALNPY - Free Report) , Copa Holdings SA (CPA - Free Report) and SkyWest Inc. (SKYW - Free Report) , all with a Zacks Rank #2 (Buy).
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Delta Air Lines' (DAL) August PRASM Hit by Power Outage
Delta Air Lines (DAL - Free Report) revealed dismal traffic numbers for the month of August. Revenue passenger miles (RPMs: a measure of air traffic) declined 2.8% to 20.22 billion on a consolidated basis. Weakness in both domestic and international traffic hurt the metric.
Average seat miles (ASMs: a measure of capacity) grew marginally (0.5%) to 23.95 billion on a consolidated basis. Load factor (% of seats filled by passengers) declined 290 basis points to 84.4% in the month as capacity expanded while traffic contracted leading to empty planes. The company registered a completion factor (mainline) of 98% with 79.9% flights on schedule in the month.
The airline behemoth witnessed a 9.5% decline in consolidated passenger revenue per available seat mile (PRASM: a key measure of unit revenue). The metric was mainly hurt due to the power outage suffered by the company in August. The outage crippled operations resulting in 2,300 flights being cancelled over a three-day time span.
The severity of the disruptions can be gauged from the fact that the Atlanta, GA-based carrier recorded $100 million less in its August revenues. PRASM was negatively impacted by the outage to the tune of 2 percentage points which caused undue harassments to several passengers. Apart from the outage, other factors that hit unit revenues were declining airfares, the supply-demand imbalance in the Transatlantic, apart from the headwinds related to its Yen hedge positions.
In the first eight months of 2016, Delta generated RPMs of 145.5 billion (down 2% year over year) and ASMs of 172.3 billion (up 2.5%), leading to a total load factor of 84.4% (down 50 bps).
Zacks Rank & Key Picks
Delta currently carries a Zacks Rank #5 (Strong Sell). The bearish rank is attributable to the multiple headwinds, including PRASM woes, being faced by the carrier. The company has seen its stock price go down over 26% on a year-to-date basis.
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With Delta continuing to disappoint, investors interested in the airline space may consider ANA Holdings Inc. (ALNPY - Free Report) , Copa Holdings SA (CPA - Free Report) and SkyWest Inc. (SKYW - Free Report) , all with a Zacks Rank #2 (Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>