Delta (NYSE: DAL), the second-largest U.S. airline, announced on Monday that it will fly fewer seats this winter than it had planned and defer the 2018 delivery of four large aircraft.
Right after the announcement, shares of Delta rose more than 3%, a phenomenon which is indicative that with this move, which is believed as an reaction to those extra flights by rivals threaten to depress its ticket prices, will help Delta reach its goal of reversing the decline of a closely watched financial measure - passenger revenue divided by its plane seats and mileage - before the end of this year.
Although Delta, according to a regulatory filing, will scrap 1% of its planned growth in the fourth quarter so flight capacity rises by less than 2% in the second half of 2016, the company stillclaimed that it will keep its long-term expansion in check by deferring the delivery of four wide-body A350 aircraft from Airbus Group SE from 2018to 2019 or later. Delta has 25 A350-900s on order, aimed at replacing its biggest plane, the Boeing Co 747.
This could be a possible reason to explain Delta’s claim that it would increase its annual dividend to investors by 50 percent to 81 cents per share in spite of 4% decrease in its ticket revenue from corporate travelers and 15% cut down in trans-Pacific capacity.