Delta Airlines: Invest Now?

Delta Air Lines (DAL) has been a popular stock for investors, especially those looking to capitalise on the recovery of the airline industry post-pandemic. However, opinions vary on whether it is a good time to invest in the company.

On the one hand, Delta has a long history of innovation and strong management, and the company's share price has risen from $34 to $53 over the last two years. The airline industry is also experiencing a period of growth, with more consumers flying and an increase in demand. Delta's revenue stream is diversified, and the company has a strong loyalty reward program.

On the other hand, Delta's load factor has decreased, and the company has faced financial losses due to factors such as hurricanes and an older fleet of aircraft. The company's sales have been flat over the last few years, and some analysts are concerned about the impact of increasing fuel prices and baggage prices on Delta's revenue.

Overall, Delta Air Lines appears to be a stable company with a positive outlook, but investors should carefully consider the potential risks and challenges before making any investment decisions.

Delta Air Lines' share price

Delta Air Lines, Inc. (DAL) is currently rated as a Zacks Rank 4, with a below-average return expected from the DAL shares relative to the market in the next few months. The stock has a VGM Score of A, which is a weighted average of the individual Style Scores that allow users to focus on the stocks that are the best fit for their personal trading style. DAL's Value Score of A indicates that it would be a good pick for value investors. The company's financial health and growth prospects demonstrate its potential to outperform the market, with a Growth Score of B. However, with a Momentum Score of D, the stock is not a good choice for momentum investors.

Delta Air Lines has a long history of innovation in the airline industry and has been recognised for its strong management and sound economic position. The company's revenue streams are diversified, and it has a strong loyalty reward program with American Express, as well as strategic alliances with other airlines. Delta has also made investments in renovations at LaGuardia, a signature hub for the airline.

However, there are some potential downsides to consider. Delta has an older fleet and is replacing its domestic fleet with more energy-efficient aircraft, which may impact costs and fuel prices. The company's load factor, or the percentage of airplane seats taken up by passengers, fell in its September 2018 traffic report. Additionally, natural disasters such as Hurricane Florence can impact the company's profits, with a projected loss of $30 million in third-quarter pre-tax income attributed to the storm.

Overall, Delta Air Lines' share price has seen an upward trend, and the company appears to be on a bullish path with solid management. However, investors should carefully consider the potential risks and challenges, such as fuel prices and fleet updates, before making investment decisions.

Delta's financial results

Delta Air Lines, Inc. (DAL) has been in a steady "lift-off" mode over the past few years, with its share price rising from $34 to $53 in the last two years. The company's revenue has also been increasing, reporting $11.95 billion in the third quarter, better than the expected $11.92 billion. Delta's CEO, Edward Bastian, attributed this success to the high demand for the company's product.

However, there are some potential challenges for Delta. The company's load factor, or the percentage of airplane seats taken up by passengers, fell in the last 30-day period of its September 2018 traffic report. Additionally, natural disasters such as Hurricane Florence have impacted Delta's profits, with the hurricane expected to reduce the company's third-quarter pre-tax income by $30 million. Delta is also facing increased fuel prices, which have led to higher baggage prices that may cause passengers to opt for driving over flying during the busy holiday season.

Despite these challenges, Delta's management and financial path appear strong. The company has a history of innovation, being the first airline to use in-cabin video "moving maps" and to ban smoking on flights. Delta's CEO, Edward Bastian, has been credited with bringing loyalty to the company and taking smart risks. Bastian's focus on taking care of his people has resulted in a culture of loyalty that permeates Delta.

In terms of revenue, Delta has been capitalizing on tax reform benefits, with an 11% increase in earnings per share. The company also has a strong loyalty reward program with American Express and strategic alliances with Air France-KLM, Korean Air, and Aeromexico. Additionally, Delta has been investing in renovations, recently closing a $1.4 billion tax-exempt bond to finance renovations at LaGuardia, one of its signature hubs.

Analysts seem generally bullish on DAL stock. Walletinvestor.com predicts that Delta's share price will rise to $66 in one year and $92 in five years, with a long-term earning potential of 20.9% in one year. Delta's current stock price is $46.35.

Delta's management

Delta Air Lines' management team is led by CEO Ed Bastian, who has been with the company for over 20 years and has been instrumental in its growth and success. The management team is organised as follows:

• Alain Bellemare, E.V.P. & President – International
• Mike Spanos, Chief Operating Officer
• Tim Mapes, S.V.P. and Chief Communications Officer
• Alicia Tillman, Chief Marketing Officer
• John Laughter, E.V.P., Chief of Operations and President, Delta TechOps
• Peter Carter, E.V.P. - External Affairs
• Eric Phillips, S.V.P. and Chief Digital Officer
• Dan Janki, E.V.P. and Chief Financial Officer
• Henry H. Ting, S.V.P. & Chief Health Officer
• Steve Sear, E.V.P. – Global Sales and Distribution
• Glen Hauenstein, President
• Joanne Smith, E.V.P. and Chief People Officer
• Rahul Samant, E.V.P. and Chief Information Officer
• Gary Chase, S.V.P. – Business Development and Financial Planning
• Allison Ausband, E.V.P. and Chief Customer Experience Officer

Delta's revenue

Delta Air Lines' revenue has been steadily increasing over the years. In the quarter ending March 31, 2024, the company reported a revenue of $13.748 billion, a 7.75% increase year-over-year. For the twelve months ending March 31, 2024, Delta's revenue was $59.037 billion, a 9.34% increase compared to the previous year.

In 2023, Delta Air Lines' annual revenue was $58.048 billion, a significant jump of 14.76% from 2022. This continues a positive trend, as the company's revenue in 2022 was $50.582 billion, a 69.18% increase from 2021. The revenue growth from 2021 to 2022 is particularly notable, as it indicates a strong recovery from the impact of the pandemic in 2020, when revenue stood at $29.899 billion.

The bulk of Delta's revenue is generated from its airline segment, with the remaining portion coming from its refinery segment, which provides jet fuel for the airline division. Delta's revenue growth can be attributed to various factors, including strong management, a sound economy, and a loyal customer base. The company has also diversified its revenue streams through partnerships and alliances, such as its loyalty reward program with American Express. Additionally, Delta has a history of innovation, being the first airline to use in-cabin moving maps and the first to ban smoking on flights.

Despite the positive revenue growth, it is important to consider other factors when deciding whether to invest in Delta Air Lines. Analysts have noted that Delta's sales have been relatively flat over the last few years, and the company faces challenges such as increasing fuel prices and the impact of natural disasters. However, Delta has taken steps to address these challenges, including replacing its domestic fleet with more energy-efficient aircraft. Overall, Delta Air Lines appears to be on a positive trajectory, but investors should conduct a comprehensive analysis before making any investment decisions.

Delta's competitors

Delta Air Lines' main competitors are:

• United Airlines Holdings (UAL)
• Southwest Airlines Co. (LUV)
• American Airlines Group (AAL)

United Airlines Holdings is one of the largest airline holding companies in the world, with major hubs in Chicago, Denver, Houston, Los Angeles, San Francisco, Washington D.C., Guam, and Newark, New Jersey. In 2020, United Airlines transported nearly 57.8 million passengers and lost $7 billion on $15.35 billion in revenue.

Southwest Airlines is known for its friendly customer service and cheap flights to secondary airports along popular, high-revenue routes. As of 2020, Southwest operated 718 Boeing 737 aircraft and flew to 107 airports in 40 states. In 2020, the airline transported nearly 67.8 million passengers and lost $3 billion on $9 billion in revenue.

American Airlines Group is a holding company for American Airlines and its wholly-owned regional carriers, with major hubs in Charlotte, Chicago, Dallas-Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington D.C. As of 2020, the company operated 855 mainline aircraft and 544 regional aircraft, transporting 95 million passengers. In 2020, American Airlines lost $8.88 billion on $17.33 billion in revenue.

Other competitors include Hawaiian Airlines, Frontier Airlines, Air France-KLM, Qatar Airways, Etihad Airways, Spirit Airlines, Alaska Air Group, and more.

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