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Delta (DAL) Posts Increase in August Traffic and Load Factor


Delta Air Lines, Inc. DAL delivered impressive traffic figures for August. Consolidated traffic, measured in revenue passenger miles (RPMs) came in at 22.4 billion, up 3.6% year over year.

Consolidated capacity (or available seat miles/ASMs) expanded 3.5% to 25.5 billion on a year-over-year basis. Consolidated load factor (percentage of seats filled by passengers) increased 10 basis points to 88%, as traffic growth outpaced capacity expansion.

Strong demand for air travel led to increase in load factor. In fact, this Atlanta, GA-based carrier transported 18.3 million passengers in the month, up 4% on a year-over-year basis. Additionally, the carrier recorded an on-time performance (mainline) of 83.3% and completion factor (mainline) of 99.8% for August.

At the end of the first eight months of 2018, Delta generated RPMs of 153.7 billion (up 3.2% year over year) and ASMs of 178.9 billion (up 3.2% year over year). Load factor remained unchanged at 85.9% on a year-over-year basis.

However, the Delta stock lost 2.8% of its value on Sep 5 in spite of posting impressive traffic numbers. We believe that the decision of the carrier to not increase third-quarter earnings per share (EPS) guidance despite robust demand for air travel led to the decline in stock price.

At the Cowen and Company 11th Annual Global Transportation Conference, this airline behemoth stated that it still expects third-quarter EPS between $1.65 and $1.85. The Zacks Consensus Estimate for current-quarter earnings is currently at $1.77, well within the guidance.

Zacks Rank & Key Picks

Delta carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Transportation Sector are CSX Corp. CSX, Norfolk Southern Corp. NSC and Old Dominion Freight Line, Inc. ODFL. While Old Dominion carries a Zacks Rank #2 (Buy), CSX and Norfolk Southern sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of CSX, Norfolk Southern and Old Dominion have gained 32.1%, 24.3% and 11.8% in the past six months, respectively.

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