How Did Delta Perform Operationally In December?
Delta Air Lines (NYSE:DAL), like its peers, faced a challenging year in terms of unit revenue growth. Unit revenues, or passenger revenue per average seat mile (PRASM), were under the pump throughout 2016 due to the strong dollar, low fuel prices, geopolitical turmoil, and increasing competition from low cost carriers. In addition to this, the one-time technology outage episode weighed on the company. However, since November, the company has seen the continued supply-demand imbalances plaguing the industry dissipate. After being down approximately -1% y-o-y in November, unit revenues remained flat in December. This is attributable to the improvement in yields in different regions, due to the company’s revenue management strategies (Read: Delta’s Path Towards Positive Unit Revenues). Consequently, the company expects the decline in unit revenues in the December quarter to be limited to -2.5% to -3% y-o-y.
Talking about capacity management, Delta’s available seat miles decreased by -1.5% internationally, and rose 3.4% domestically, bringing the consolidated capacity up 1.5% y-o-y. Most of the cuts on the international routes continued to be in the Atlantic and Pacific regions. Year-to-date, the capacity was up 2.1% y-o-y, in line with its full year capacity guidance of 1%-2%, mainly due to growth in the domestic network. Further, passenger traffic rose 2.6%, mainly due to growth in domestic demand and on Latin American routes. The occupancy rate (+0.9%) and the number of passengers boarded (+2.8%) were both seen improving in the month, indicating that the airline is on the right path.
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Have more questions about Delta Air Lines (NYSE:DAL)? See the links below:
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