Delta Air Lines (DAL) May Traffic, PRASM Increase, Stock Up

Atlanta, GA-based Delta Air Lines (NYSE:DAL) posted an increase in air traffic for the month of May 2017. Consolidated traffic – measured in revenue passenger miles (RPMs) – came in at 19.14 billion, up 1.7% year over year. The upside was driven by a 2.9% increase in domestic RPMs.

In fact, consolidated capacity (or available seat miles/ASMs) was flat at 22.07 billion on a year-over-year basis. The metric declined 3.1% on the international front mainly due to a 13% reduction in the metric in the Pacific area. On the contrary, consolidated load factor, or percentage of seats filled by passengers, improved 140 basis points to 86.7%. This is because traffic expanded while capacity remained flat in the month leading to packed planes. Additionally, the airline recorded an 82.7% on-time performance and 99.9% completion factor (mainline) for the same month.

At the end of the first five months of 2017, Delta generated consolidated RPMs of 84.7 billion (up 1% year over year) and ASMs of 100.6 billion (down 0.4% year over year). Notably, load factor was 84.2% versus 83% recorded last May.

We believe that more than the above numbers, it was Delta’s 3.5% increase in passenger revenue per available seat mile (PRASM: a measure of unit revenue) registered in May that pleased investors. Consequently, the stock gained 2.69% to close the trading session on Jun 2 at $51.19.

Delta Stock Performing Impressively

Shares of Delta rallied 5.5% and outperforming the Zacks categorized Transportation-Airline industry’s gain of 3% over the last one month.

The strong May traffic report and the impressive PRASM performance are further positives for the stock.

Zacks Rank & Stocks to Consider

Delta carries a Zacks Rank #3 (Hold). Better-ranked stocks in the airline space include United Continental Holdings (NYSE:UAL) , Deutsche Lufthansa (OTC:DLAKY) and Ryanair Holdings (NASDAQ:RYAAY) . While United Continental carries a Zacks Rank #2 (Buy), Lufthansa and Ryanair sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

We note that shares of Lufthansa, Ryanair and United Continental have gained 55.4%, 30.8% and 12.6%, respectively, on a year-to-date basis.

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