Delta Hit by Weakness in International Business

deltaThe Associated Press, April 2, 2015

ATLANTA (AP) — Delta Air Lines Inc. says that the strong dollar is hurting international sales and its U.S. business isn't growing as quickly as expected.

Delta said Thursday that passenger revenue for each seat flown one mile was unchanged in March from a year earlier and declined 1.5 percent for the full first quarter because of the impact of currency rates. Delta said the revenue figure rose for March domestic flights but not as much as expected.

The revenue figure is watched closely in the airline business, and it rises when demand is strong enough for airlines to charge higher average fares.

Earlier this week, Deutsche Bank downgraded shares of Delta, American and United. The bank said it expected that the strong dollar and weak global economic growth would cut into the airlines' international sales and drag down earnings.

Atlanta-based Delta said it expects the average price in the first quarter to be between $2.90 and $2.95 per gallon. That is up from a January forecast of $2.45 to $2.50 per gallon.

The shares fell 52 cents to $42.74 in afternoon trading. Its shares are up more than 19 percent over the past year.

Meanwhile, the parent of Alaska Airlines and Horizon Air said traffic rose 11.2 percent in March, but there were more empty seats because the carriers expanded. The average flight was 86.1 percent full, down from 87.1 percent a year earlier.

Seattle-based Alaska Air Group Inc. did not provide revenue figures.

Its shares fell 68 cents, or 1.1 percent, to $63.32 in afternoon trading. Its shares are up almost 34 percent over the past year.

 

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