Delta's August Passenger Revenue Falls, Hurt by Computer Outage

Delta Air Lines Inc. said a key metric that measures passenger revenue fell 9.5% in August, hurt in part by the airliner's computer problems during the month.

The No. 2 air carrier by traffic said the computer failure, which resulted in 2,300 canceled flights over three days, hurt its August revenue by about $100 million, representing 2 percentage points of the decline in passenger-unit revenue.

Unit revenue is considered an important measure of performance for the airline sector and represents the amount of money received by Delta per seat flown a mile.

Unit revenue at U.S. airliners have been shrinking for more than a year amid a price war in the industry. Many airlines took advantage of lower oil prices by adding flights and seats, but they overestimated demand. As a result, U.S. airlines have been caught in a spiraling fare war.

Delta said its overall traffic in August fell 2.8%. Capacity increased 0.5%, while load factor, or the percentage or seats filled, declined to 84.4% from 87.3% a year earlier.

Delta's technical problems in August were caused by a malfunction in the electrical system that powers computers at the airliner's Atlanta headquarters. Company officials called the failure a one-time event, but the outage raised questions about the carrier's information technology.

In addition to the computer problems, Delta said it continued to see pressure from domestic yield weakness, the continuing supply-demand imbalance in the trans-Atlantic and headwinds from its Yen hedge positions.

In comparison, Delta's unit revenue fell 7% in July and 4.9% in the June quarter.

Write to George Stahl at [e-mail]

(END) Dow Jones Newswires

September 02, 2016 11:15 ET (15:15 GMT)

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