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Delta Air Lines' (DAL) April Traffic Up, PRASM Down 5%

Delta Air Lines Inc.’s DAL posted impressive air traffic data in the month of April. Traffic – measured in revenue passenger miles (RPMs) – stood at 17.76 billion, up 1.2% from 17.55 billion recorded a year ago.

On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) inched up 1.5% to 20.94 billion. Meanwhile, the load factor or percentage of seats filled by passengers decreased by 20 basis points to 84.8%.

At the end of the first four months of 2016, Delta generated RPMs of 47.72 billion (up 3.2% year over year) and ASMs of 58.14 billion (up 2.7% year over year). Load factor stood at 84.8% versus 85% recorded last April. Likewise, passenger count in the month grew 2.1% while that for the first four months of this year rose 4.8%.

However, Delta witnessed a 5% drop in PRASM (passenger revenue per available seat mile) in the month mainly impacted by volatile foreign currency exchange rates and the recent mishap in Brussels. Moreover, soft passenger yields (average fare paid per mile, per passenger) from domestic markets affected the PRASM figure.

Delta also anticipates operating margin in between 18% and 19% for the first quarter of 2016 while PRASM is likely to drop 4.5% for the same period.

The company’s significant route expansion plans, introduction of ancillary products, fleet revamping and customer service enhancement bode well. Further, the company has been reaping considerable benefits from its joint ventures and code share agreements.


Zacks Rank & Stocks to Consider

Delta currently carries a Zacks Rank #3 (Hold). Better-ranked stocks include Deutsche Lufthansa Aktiengesellschaft DLAKY, China Eastern Airlines Corp. Ltd. CEA and SkyWest Inc. SKYW. Both Deutsche Lufthansa and China Eastern sport a Zacks Rank #1 (Strong Buy) while SkyWest carries a Zacks Rank #2 (Buy).

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DELTA AIR LINES (DAL): Free Stock Analysis Report
 
CHINA EASTN-ADR (CEA): Free Stock Analysis Report
 
SKYWEST INC (SKYW): Free Stock Analysis Report
 
LUFTHANSA -ADR (DLAKY): Free Stock Analysis Report
 
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