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Delta Lowers Unit Revenue View Despite Traffic Uptick

Delta Terminal 3, JFK Airport

Delta Terminal 3, JFK Airport (REUTERS)

Delta Air Lines (DAL) said its total system traffic in March edged up 0.1%, but the airline lowered its first-quarter guidance for unit revenue amid the impact of a weaker Japanese yen on its Pacific segment.

Shares fell sharply in early morning trading Tuesday, dropping 7.38% to $15.05.

Delta, the second-largest U.S. airline by traffic, had projected its first first-quarter profit since 2000 amid growth of between 4.5% and 5.5% in unit revenue, the amount earned for each passenger flown per mile.

In a filing with the SEC on Tuesday, Delta lowered its estimate to unit revenue growth of 4% to 4.5% for the period. It also lowered the high end of its operating margin view by one percentage point, providing guidance of 2.5% to 3.5%.

The carrier said unit revenue rose just 2% last month compared to the prior year, as U.S. government spending cuts drove close-in bookings lower.

Also in March, passenger revenue per available seat mile, which is considered an important gauge of performance for airlines, rose 2%.

Total system capacity dropped 0.6% and load factor, the percentage of seats filled, rose to 84.7% from 84.1%. Capacity was down 2% to 3%, while the company expected it to fall by as much as 4%.

Follow Matthew Rocco on Twitter @MatthewRocco