Delta believes it is equipped to battle currency headwinds lingering in 1H2015
Delta Air Lines plans to cut its international capacity during the 2015-2016 winter season to bolster its unit revenue performance that was dragged down in 1Q2015 by weakening currencies against the USD. The airline is looking to regain some unit revenue traction in late 2015 as it reduces its supply to weaker performing markets.
The company believes that lower fuel prices and its continued favourable unit cost performance should offset the currency headwinds it faces as operating margins are forecasted at 16% to 18%. Overall, Delta expects margin and profitability expansion in 2015 despite the challenges created by the stronger USD.
Part of Delta's bullishness about withstanding currency pressure is a restructuring of its hedge book that generated USD1 billion in losses for 1Q2015, but should align Delta's fuel costs with industry averages in 2H2015.
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