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Delta Air Lines: Operational Performance for 2017

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Oct. 16 2017, Updated 1:06 p.m. ET

Traffic growth

Delta Air Lines’ (DAL) average traffic increased 3.4% YoY (year-over-year) to 61.0 million passenger miles for 3Q17. For the first nine months of 2017, Delta’s traffic increased 2.1% to 166.5 billion miles. Growth in Delta’s traffic has been largely driven by increasing travel demand with little capacity growth. That hasn’t been the case for other carriers. Spirit Airlines (SAVE) hasn’t been able to increase its traffic despite capacity growth. Delta’s performance has also exceeded American Airlines (AAL) and United Continental (UAL).

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Capacity

Delta Air Lines’ capacity increased 1.6% YoY to 70.2 million miles for 3Q17, which was at a much slower pace than traffic in the same period. For the first nine months of 2017, capacity increased 0.60% YoY to 194.3 billion miles, which was also slower than traffic growth in the same period.

As a result, its load factor increased 1.5 percentage points to 86.9% in 3Q17 and 1.3 percentage points to 85.7% YTD (year-to-date) as of September 2017.

Outlook

For the fourth quarter of 2017, Delta Air Lines expects to increase its system capacity ~2.0% compared to the fourth quarter of 2016. That should keep capacity growth within Delta Air Lines’ 2017 capacity growth target of 0.0%–1.0%.

IATA (International Air Transport Association) believes the long-term passenger demand growth story is intact. However, in the short term, it’s seeing an easing of demand and expects a low single-digit passenger demand growth in 2018.

You can gain exposure to Delta Air Lines by investing in the PowerShares Buyback Achievers ETF (PKW), which invests 1.7% of its holdings in Delta. Next, let’s see how Delta Air Lines turned around its declining revenue trend.

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