Boston, MA 07/04/2014 (wallstreetpr) – Delta Air Lines, Inc. (NYSE:DAL) has cried out loudly over unfavorable market conditions. When Delta cries, its peers such as American Airlines Group Inc (NASDAQ:AAL) are never spared investor backlash as it recently happened.
Delta recently announced a drop in a key revenue indicator and the announcement came as bad news for the industry. The company announced that its revenue per passenger dropped in June, citing the impact of FIFA World Cup and weakness in international travel.
In other words, the company warned ahead of time that it faces the possibility of generating lower revenue that guided or even missing Wall Street targets because of the decline on revenue earned per passenger.
The company noted that travelling activities to and from Latin America slowed last month has the 2014 World Cup kicked off in Brazil. Apparently the company served fewer people on the market than it expected in June.
Capacity enhancement
The quest by international airlines to boost their capacity has also reduced ticket prices, and that is having impact on revenue per passenger. That is another area in which Delta Air Lines, Inc. (NYSE:DAL) is feeling the heat.
Many international airlines across the world have been acquiring bigger jets and entering more routes in order to tap the opportunity in the growing international travel business. However, the expansion of capacity appears to have come ahead of the anticipated market growth such that airlines are feeling the challenge of their own making.
Temporary impact
Although Delta Air Lines, Inc. (NYSE:DAL) has raised a red flag over its revenue because of the slowdown in international revenue, the impact is expected to be short-lived as the World Cup draws to an end while international travel activities kick back to life.
Shares of the company are doing well and are up more than 40 percent so far this year. The company is expanding its flights domestically and internationally so as to attract higher revenue. The action has won it investor confidence as can be seen the rally of the stock.
