Delta Air Lines, Inc. (DAL) Continued Its Unit-Revenue Dominance in January

Page 1 of 2

Most major airlines report unit revenue statistics every month. It is a good idea for airline investors to pay attention to these reports, because unit revenue captures changes in load factor (the proportion of seats filled), and changes in yield (the price paid by fliers). Strong increases in unit revenue can offset normal cost increases and improve profitability, while weaker unit revenue often results in lower earnings.

Delta Air Lines, Inc. (NYSE:DAL)The unit revenue statistics reported are preliminary and could be revised later, but they tend to be fairly accurate.  With that in mind, let’s take a look at the unit revenue performance of the top five U.S. airlines last month.

Unit Revenue Performance for Top Five U.S. Carriers

Airline Unit Revenue Increase
AMR 3.1%
Delta Air LInes, Inc. (NYSE:DAL) 5.5%
Southwest Airlines (NYSE:LUV) 2%
United Continental (NYSE:UAL) 3%-4%
US Airways (NYSE:LCC) 3%

Source: Company press releases

Delta continues its dominance
Delta has been the most consistent strong performer over the past two years. Once again, Delta led the industry by a comfortable margin last month, with a 5.5% unit revenue increase. Delta has benefited from stability, while American has gone through bankruptcy, and United and Southwest have faced merger integration hurdles. At the same time, Delta has bolstered its position in the critical New York market. Strong revenue increases have helped Delta offset significant cost increases over the past two years. Delta has implemented several cost-reduction initiatives that should stop cost growth in its tracks in the second half of 2013. If the company can maintain its revenue momentum, profit will spike in Q3 and Q4.

Merger integration is hard
Southwest and United Continental, by contrast, again reported weaker unit revenue growth than Delta. United and Continental merged in 2010, while Southwest bought AirTran in 2011; however, neither company has achieved merger-related “revenue synergies” yet.

Southwest has been operating AirTran as a separate subsidiary so far, and is just beginning to connect the two networks. Indeed, Southwest’s decision to dismantle AirTran’s Atlanta hub may be the cause of its recent underperformance; with fewer connection options, AirTran’s hub-and-spoke model does not work. The full connection of the Southwest and AirTran networks in the coming months could help Southwest regain some momentum. Investors should keep an eye on this.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

The 10 Biggest Tax Havens in the World to Stash Your Money

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!