8-Sep-2016 6:35 AM
Delta Air Lines outlines capacity guidance
Delta Air Lines outlined (07-Sep-2016) the following capacity guidance for its domestic, Latin, Pacific and Atlantic markets:
- Capacity growth to decelerate in 2H2016 and moderate to a 2.5% increase by 4Q2016, compared to a growth of 5.7% in 1H2016. The carrier reported a solid improvement from its summer performance as they implement the autumn schedule, with revenue management strategies leveraging its winter capacity profile. Delta's business travel segment is becoming a larger component of its overall revenue, while the branded fares' expansion into more markets and distribution channels continues with strong results;
- Latin America/Caribbean:
- Region is already achieving positive PRASM, driven by south America and Mexico. Brazil's currency improvement is driving a better demand and higher fares, with Delta expecting Brazil's RASM to continue positive trends into 4Q2016 and 2017. The Latin market's capacity growth for 4Q2016 remains flat with reductions in Brazil and central America, although there is modest growth in the Caribbean and Mexico;
- Winter capacity down 15% compared to 2014, with reductions focused on underperforming markets. The carrier sees additional challenges arising from entity restructuring and a split operation at Tokyo Haneda and Tokyo Narita airports. 3Q2016 RASM is "likely" positive but 4Q2016 RASM is under pressure with reduced surcharges and 10% capacity growth industry-wide.
- Currency expected to remain a modest headwind into 2017, with winter capacity down 3% compared to 2014. The carrier has trimmed winter capacity as events in Paris, Brussels, Nice, Istanbul and Munich impact transAtlantic demand. Delta referred to a "challenging" revenue environment, with industry capacity outstripping demand due to growth by ULCCs and Middle East carriers. [more - original PR]