Delta Poised to Regain Power Over Airfares After Two-Year Slump

(Bloomberg) -- Delta Air Lines Inc. is finally showing a return to pricing power after a two-year slump, leading stocks to climb across the industry.

Passenger revenue for each seat flown a mile rose 3.5 percent in May, the second-biggest U.S. carrier said Friday. The increase showed that Delta is on track for a 3 percent gain this quarter in the benchmark financial gauge, JPMorgan Chase & Co. analyst Jamie Baker said in a note to clients.

Delta's performance cheered airline investors, who have been watching for a rebound in the passenger revenue measure, a proxy for a carrier's control over fares. American Airlines Group Inc., the world's biggest carrier, has been regaining pricing power in recent quarters while Delta has yet to emerge from a series of declines that began in early 2015.

The Atlanta-based carrier is “getting its mojo back,” Duane Pfennigwerth, an analyst at Evercore ISI, said in a note to clients. “We see significant improvement potential.”

Delta climbed 3.2 percent to $51.45 at 1:34 p.m. in New York after advancing as much as 4.1 percent for the biggest intraday gain in a month. The airline rose 1.3 percent this year through Thursday compared with a 6.8 percent increase for a Bloomberg index of U.S. airlines.

The Atlanta-based carrier was the fourth-biggest gainer on the S&P 500 Index, sweeping up other airline stocks in its wake. United Continental Holdings Inc. was also in the top 10 of the S&P 500.

To contact the reporter on this story: Michael Sasso in Atlanta at msasso9@bloomberg.net.

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson