Rebound in international markets drives Delta Air Lines' capacity uptick in 2018

Premium Analysis

Delta Air Lines posted the first positive results in its trans-Atlantic entity in three years in 3Q2017, at a time when low cost competitors have expanded in the market place. That performance resulted in the airline's overall international unit revenue growth for the quarter outpacing domestic, and Delta believes the momentum in its international operations will remain robust for the remainder of 2017.

The performance is a bit of surprise, given that Delta's domestic entity has been an outperformer for the past couple of years. The rebound in the trans-Atlantic is giving Delta confidence that it should end 2017 with positive unit revenue in each of its geographical entities.

Delta's initial capacity forecast for 2018 is growth of 2% to 3%, which is higher than the 1% increase the airline is planning for 2017. Some of the increase is driven by longer stage lengths, and part of the bump is a return to international capacity growth as Delta believes it can take advantage of renewed strength in those markets.

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