Airline February Traffic Data: What To Know

Delta Air Lines, Inc. DAL has reported year-over-year (Y/Y) February traffic growth of 5.3 percent on a capacity increase of 6.0 percent. In a press release, Delta emphasized the strong environment for airlines.

“Across all entities, booking trends into the peak leisure season are strong and corporate demand remains solid as higher volumes continued to offset lower yields,” the company said.

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See What March Numbers Bring

The positive numbers are reassuring to airline investors, but Buckingham Research analyst Daniel McKenzie urges traders to keep the February numbers in perspective. Last year, the airline industry cancelled 5.4 percent of its flights due to weather, making for an extremely easy comp. In addition, the Leap Day means one extra day of travel this February.

McKenzie noted that JetBlue Airways Corporation JBLU is most at risk of having its February data misinterpreted by the market. A 20 percent February capacity increase for JetBlue, when adjusted for flight cancellations and the Leap Day, would only end up being an 11 percent Y/Y change.

According to McKenzie, it’s March, not February, that will tell the true story for airlines.

“March is the make or break month for the quarter: 36 percent of the industry’s capacity is flown this month (vs 33 percent in Jan and 31 percent in Feb, ultimately making Feb traffic stats less important),” he explained.

Although McKenzie urges traders not to overreact to strong reported February numbers, Buckingham maintains Buy ratings on Delta, JetBlue, American Airlines Group Inc AAL, United Continental Holdings Inc UAL and Southwest Airlines Co LUV.

Disclosure: The author holds no position in the stocks mentioned.