Delta Air Lines announced on Thursday that demand for U.S. travel remains steady and domestic fares are beginning to increase for the first time in a year, relieving the concerns of investors and boosting airlines stocks on the same day.
Shares of the airline company rose 1 percent, while American Airlines Group Inc and United Continental Holdings Inc also climbed up, at 3 percent and 2 percent respectively.
Delta said that the airlines' financial measure - revenue divided by all the planes seats and the total miles flown by them - will stop dropping this year. That means the previous month-long decline that airlines are currently experiencing will stop.
This is due to strong bookings and the easing of currency pressures regarding international flights. In areas where the demand is weak, the airline company said it will cut its service, if needed.
It appears that Delta Air Lines efforts in revenue recovery are paying off. A January 2016 report indicated that of the three largest air carriers in the United States, Delta is the most pro-active in terms of achieving targeted capacity cuts to support its revenue recovery.
Unit revenues in American Airlines, United Continental and Delta Air lines declined in 2015 due to the combination of shrinking fuel surcharges on certain international routes, a strong dollar, and the increasing low-cost competition in the United States.
The airline company is hoping that the situation will change for the better. Glen Hauenstein, Delta's incoming president advised in a conference call on Thursday that the turnaround in passenger unit revenue will be a couple of months later in 2016 than previously forecasted.
And Wall Street also thinks the same way.
A recent survey conducted by Hunter Keay, a Wolfe Research analyst shows that one third of airline investors surveyed believed that Delta would not be able to hit its revenue goal this year.
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