How Did Delta Perform Operationally In July?
Delta Air Lines (NYSE:DAL) reported better-than-expected growth in its key metrics this time around. The traffic report was in line with the company’s capacity guidance, with system-wide capacity up 1.5% y-o-y in July. This marks the first month in the year to see positive capacity growth. Continued efforts at streamlining international routes, primarily in the Pacific region, in order to promote efficiency, was the main reason attributable to capacity declines earlier in the year.
Furthermore, owing to the company’s capacity discipline, Delta saw an increment in its July load factor, which was up 100 bps to 88.1%. Additionally, the growth in passenger traffic increased by about 2.7% y-o-y, while the number of passengers boarded also jumped by a modest 2.9% y-o-y in the month.
Despite the troubled start to the year, the company expects to achieve the lower end of the long-term targets that were most recently revised in May this year. Over the next three years, the airline targets to earn operating margins in the 16-18% range, with an EPS growth of about 15%, while taking in $4.5 billion to $5.5 billion of free cash flows.
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