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Delta Air Lines Down 3% after Reporting Record August Traffic

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Record passengers

Delta Air Lines (DAL) just reported that it flew 18.3 million passengers last month—the most ever for the month of August and 4% higher than last August. It had flown a similar 18.3 million passengers in July 2018, the highest-ever amount for the airline. Delta has flown almost 129.9 million passengers in 2018 so far, 2.9% higher than the comparable period last year.

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Demand grows higher than capacity

In good news for Delta investors, demand at the airline grew 3.6% year-over-year or YoY to 22.4 million miles, higher than the 3.5% YoY capacity growth to 25.5 million miles.

Through August 2018, the company has covered 153.7 million miles—3.2% higher than the corresponding period last year. Capacity has grown by a similar 3.2% YoY to 178.9 million miles.

Utilization, as calculated by load factor, improved 0.1% in August to 88.0%.

Despite the stellar traffic numbers, Delta stock declined 3.3% intra-day on September 5 on fears of business disruption due to the approaching hurricane season. Tropical Storm Gordon, which was supposed to turn into a hurricane, has already delayed Delta Air Lines flights in Gulfport, Mississippi, and Mobile, Alabama.

The stock has recovered to a 2.6% decline and is trading at $57.20. Delta Air Lines has returned 5.7% in 2018, which is lower than the S&P 500’s returns as tracked by the SPDR S&P 500 ETF (SPY). SPY has returned 7.2% so far this year.

Other airlines seem to have taken a beating, too. American Airlines (AAL) has declined 3.12% and is trading at $39.49. Southwest Airlines (LUV) has declined 0.76% to $61.52 while JetBlue Airways (JBLU) has declined 0.73% to $19.07. On the other hand, United Continental (UAL) has gained 0.12% to $88.41 and Alaska Air (ALK) has gained 0.1% to $67.96.

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