Delta Air Lines (NYSE:DAL) Stock Price & Quote Analysis

DAL fundamental analysis
Snowflake Score
Valuation	1/6
Future Growth	4/6
Past Performance	1/6
Financial Health	1/6
Dividends	0/6

Summary of all time highs, changes and price drops for Delta Air Lines
Historical stock prices
Current Share Price	US$29.49
52 Week High	US$46.27
52 Week Low	US$27.80
Beta	1.19
1 Month Change	-7.93%
3 Month Change	1.80%
1 Year Change	-31.99%
3 Year Change	-45.74%
5 Year Change	-42.80%
Change since IPO	29.40%

Sep 04

Delta Air Lines To Thrive With New Consumer Protections

Summary Delta has historically provided some of the best service among U.S. airlines. The U.S. Dept. of Transportation is enhancing air traveler protections. Delta's covid recovery plan and the latest protections provide investors with greater reason for investment. For months, the mainstream media and the U.S. Dept. of Transportation (DOT) have been beating the drum about how bad airline service in the U.S. has become, esp. this summer. Just this past week, months of public scorn by Pete Buttigieg, Secretary of the DOT, led airlines to codify further passenger service commitments along with new DOT information that highlights those commitments. In order to determine the investor impact of these changes, we need to use a data-driven approach to understanding the current state of airline customer service as well as examine the customer service protections that airlines gave prior to the latest commitments and assess the financial impacts of these changes. The U.S. airline industry was deregulated in 1978, ending decades of cooperation between airlines including Delta Air Lines (DAL) that involved centralized route planning for the industry by the federal government which, more importantly, resulted in little fare competition and a common service offering. The airline industry cooperated at the government’s behest by providing interline fares and service to allow passengers to use multiple airlines on a single ticket to travel from one part of the country to another. Air travel was not accessible to the masses and components such as checked bags and meals on flights of sufficient length were the norm. Deregulation brought the opportunity for legacy airlines (those that operated interstate routes prior to 1978) to spread their wings, resulting in many failures such as the flamboyant Braniff Airways which ceased operations early in the deregulated era. A new crop of airlines navigated the new environment more carefully including fellow Texas based carrier Southwest Airlines (LUV) which grew from an intrastate airline to expand eventually into a nationwide operator. Southwest brought a utilitarian approach to air travel and, with it, low fares driven by operational efficiency. Dozens of upstarts tried and failed to upend the dominance of the legacy carriers – but each managed to change the business model just enough for air travel customers to now realize that the industry is hardly a monolithic industry; service levels, route systems and fares differ markedly across the industry. It is precisely the difference in service quality – and the attendant failures of basic standards – that has been the focus of the DOT. Without the ability to regulate service levels, the DOT has aggressively taken the centralized role of documenting service quality and pushing for voluntary standards among airlines. While many consumer advocates push for a more heavy-handed regulatory approach by the DOT, many avenues are simply not legal and would undercut the free market approach to aviation which deregulation was intended to provide. The DOT’s role, then, is to provide data that air travel consumers can and should use to make informed decisions about airline quality and services offered. Caveat emptor, indeed. Consumers Benefit from DOT Reports The DOT has produced its Air Travel Consumer Report – ATCR- on a monthly basis for decades, compiling airline-submitted data now covering more than a half-dozen performance metrics. While the U.S. airline industry generates enormous amounts of data, far more of it becomes public or accessible to the public that for any other industry. Investors and travelers should know how to use and interpret the data starting with the DOT’s ATCR. The DOT defines a domestic flight as on-time if it arrives at the gate up to 14 minutes within scheduled arrival time. Based on the most recent ATCR which includes flights through June 2022, 73.5% of all U.S. domestic flights were on-time which is not only within the historic range of on-time performance for the industry but just one-tenth of one percent lower than in June 2019. There is a range of 17 percentage points between the performance of the best and worst U.S. airlines. June is typically the lowest month of the year for on-time performance and yet the difference between June 2022 and cumulative on-time year to date is just 2.5%. DOT airline on-time data (US Dept. of Transportation) The DOT has put a great deal of focus on the rate of cancellations but DOT data once again is insightful. The rate of cancellation for the industry for the first six months of 2022 is double what it was in 2021 but, more significantly, for June 2022, the first month of the summer travel season, the rate of cancellations was up just 1%. Notably, however, the rate of cancellation was higher for the big 3 – American, Delta and United – than it was for low-cost carriers. Industry followers know that low-cost carriers experienced operational disruptions earlier during the 2022 travel season and aggressively pulled down their schedules; the big 3 pulled down their domestic schedules but also restarted their transatlantic operations in force, resulting in lower system performance. Glancing back to the on-time chart above shows that the legacy carriers – including Alaska and Hawaiian – performed better with on-time in June than the low-cost carriers that had lower cancellation rates. Flight tracking services also compile on-time and cancellation rates and make it available much earlier than the DOT, although often on a subscription basis. Their data shows that the rate of cancellation and on-time in July and August has returned to historic levels indicating that the industry did take the necessary steps to reduce their schedules to match their available resources including labor. DOT airline cancellation data (US Dept. of Transportation) While every customer wants to get to their destination as scheduled, a smaller percentage of passengers check bags and yet baggage mishandling can be one of the more difficult experiences for airline passengers. DOT data for June 2022 shows that nearly every U.S. airline has offered worse baggage handling than a year ago but not by as dramatic of a change as other metrics. DOT airline baggage mishandling data (US Dept. of Transportation) The DOT also measures denied boarding, handling of personal wheelchairs and scooters, and consumer complaints as shown below with the comparison periods that the DOT uses. DOT airline denied boarding data (US Dept. of Transportation) DOT airline consumer complaint data (US Dept. of Transportation) The biggest takeaway that consumers and investors should note is that the US airline industry for YTD 2022 carried just 90% of the passengers it carried in 2019 and just 2% more than for the second quarter which includes the period in 2022 when travel began to return post-covid. Even more significantly, airlines operated 15% fewer domestic flights in June 2022 than in June 2019 but still operated more than 20,000 flights/day. Given the current level of flight activity, it is within the range of historical performance for the U.S. airline industry to have approximately 700 cancelled and 5000 delayed flights/day. While flight tracking sites such as Flightaware provide publicly accessible, real-time data on airline flight performance, the DOT’s focus on airline performance has caused many media outlets to track these statistics and then produce headlines touting “Airline passengers face thousands of delays and cancellations” when that statement is quite within the “normal” performance for the U.S. airline industry. While we can debate how well airline operations can run, the simple fact is that much of the media hype about airline performance is inaccurate and/or without context. Investors that allow that noise to influence their investment decisions could be missing significant opportunities. DOT’s New Air Passenger Tools With a good understanding of the service the airline industry is currently offering from a data perspective, we will look at the new tools that the DOT has just released to airline passengers. Although the DOT’s own data shows that there is not a significant degradation in airline service, the DOT has been pushing airlines to improve their customer service. The DOT won a round with the airline industry as the airlines agreed to provide better documentation of the amenities they offer even as a number of airlines enhanced the policies which they had previously not been willing to put in writing. The DOT’s new dashboard provides an industry-spanning chart that covers the primary amenities that airlines might offer for both delays and cancellations as noted in the chart below. In addition, the DOT has encouraged U.S. airlines to document their amenities during irregular operations (flights not operating on schedule) which the DOT has aggregated and linked to its site. To a great degree, these new tools provide airline consumers with another element of data they can use as they shop. The general theme in the comparison is that the legacy airlines offer the most complete group of amenities while ultra low-cost carriers offer the least. DOT airline customer service commitments (US Dept. of Transportation) An important caveat is in order in assessing the impact of these tools on airline customer service and on the financial impact to airlines. First, the DOT is simply documenting the commitments that airlines say they make to their passengers but is not dictating the minimum levels of service that all U.S. airlines must offer. The DOT does say they will take action against airlines that do not live up to the standards they set for themselves. Even more significantly, though, the DOT allows airlines to distinguish between airline-controlled events and those that they cannot control – including weather and air traffic delays. Airlines self-report the reason for each delayed flight and some customers might believe airline will simply absolve themselves of responsibility by blaming delays on factors such as weather and air traffic control delay. In reality, airlines take responsibility for more than two-thirds of the delays in categories such as air carrier delays (such as maintenance or crew etc) or late arriving aircraft. In assessing the impact of the newly documented commitments by airlines, it is clear that legacy carriers have an advantage not just in terms of their ability to offer more types of amenities but also based on their experience in providing amenities under an array of unwanted circumstances that are part of the fabric of air travel. Many of the legacy airlines have carts with snacks similar to what they offer onboard their aircraft ready to deploy to gate areas when flights are delayed. Several of the legacy airlines have automated the issuance of hotel and meal vouchers and a few keystrokes by a central control center can authorize a planeload of passengers to receive amenities which passengers can receive via kiosks or boarding pass printers at gates. One of the key features of the regulated airline industry was the interchange of tickets; while airlines are not required to maintain that capability, most legacy carriers maintain that capability which gives them the ability to transfer passengers to other airlines which many low-cost airlines including Southwest cannot offer. Even obtaining basic information is not the same between different airlines. While Alaska and Delta allow any passenger to obtain flight status notifications via email or text message, American and United only provide that information to passengers enrolled in their loyalty program and/or passengers that use their app. Alaska and Delta also provide maximum times for checked bags to reach the baggage claim belts or else they will provide compensation in the form of loyalty program points. Airline travel is a private/public partnership Most passengers do not appreciate the interlinked nature of air transportation between airlines and various agencies of both the federal as well as state and local governments. Even fewer passengers appreciate that virtually every commercial airline flight requires the approval of Air Traffic Control which is operated by the Federal Aviation Administration in the U.S. It is not usually an airline’s decision to decide if weather will delay a flight but rather ATC’s decision to manage the thousands of aircraft – not just commercial but also general aviation – that are in the skies over the U.S. at any one time. ATC must consider not just actual weather at a flight’s origin and destination but also predicted weather at both ends of a flight as well as enroute conditions. Nearly all U.S. airports are owned and operated by local governments that are responsible for ensuring that runways and taxiways are open. Passengers or the media that whip out their cell phones and argue that there is no weather on their cell phone radar fall far short of understanding the complexity of the national airspace system. Sites such as flightaware should be bookmarked and used as often, if not more, during travel than weather sites. Air traffic controllers have a maximum age beyond which they must retire -and that age is currently lower than for commercial airline pilots. The FAA had employees retire during the pandemic which they are replacing; in addition, demand within the U.S. is in different locations than existed pre-covid, esp. to/from Florida, requiring moving staff. Passengers that aren’t sure that airlines are telling the truth about the reasons for delays would do well to track the FAA’s aviation system status page and see where enroute route restrictions are impacting air traffic. FAA Air Traffic Control status ((FAA)) Jacksonville Center Flow Constraint ((FAA)) The Transportation Security Administration is responsible for screening all passengers and baggage that board flights within the U.S. among other responsibilities. It is noteworthy that the TSA had a higher rate of complaints than any airline, predominantly regarding passenger screening. DOT TSA complaint data (U.S. Dept. of Transportation) As with all sectors of the economy, all facets of the federal and local governments are regaining their footing after the pandemic and are facing the same labor shortage and inflationary pressures that private businesses are facing. Airline investors should understand the interlinkage between airlines and governments but should not make judgments based on government performance during the early days of pandemic recovery – just as they should do for airlines. Legacy carriers have customer service advantages

Aug 26

Delta Air Lines: Is The Reward Worth The Risk?

Summary Delta Air Lines’ EBIT margin of 4.11% is an indicator of the company’s relatively strong competitive position as compared to American Airlines, United Airlines, and Southwest Airlines. Its Return on Equity Ratio of 23.57% shows that the company efficiently uses shareholders’ equity in order to generate income. However, consumer behavior has changed over the last few years as a result of the pandemic. In this analysis, I’ll show you why I believe the reward is not worth the risk when considering whether to invest in Delta Air Lines or not. According to the HQC Scorecard, Delta Air Lines has an unattractive rating in terms of risk and reward (achieving only 30/100 points). Investment Thesis Investing in the airline industry in general and particularly in Delta Air Lines (DAL), comes with a lot of risk factors. In my opinion, the reward of investing in Delta Air Lines is not worth the risk. Therefore, I rate the company as a sell. The HQC Scorecard confirms that Delta Air Lines is unattractive in terms of risk and reward. The company doesn't achieve a very attractive rating in any category. Only for Profitability (60/100) is it rated as attractive. In the categories of Financial Strength (35/100) and Growth (32/100), Delta Air Lines is rated as unattractive. For Valuation (16/100) and Expected Return (0/100), it receives a very unattractive rating. Delta Air Lines' Competitive Advantages The company's global network contributes to a strong competitive advantage. Delta Air Lines serves over 130 countries and territories as well as over 800 destinations around the world. At the end of 2021, Delta Air Lines offered more than 4,000 daily departures to its customers. Furthermore, the company's global network is supported by a fleet of about 1,200 aircrafts that vary in size and capabilities. This gives the company flexibility to adjust aircraft to its existing network. The global network of Delta Air Lines and other existing airline companies in combination with high necessary capital expenditures (such as for aircraft leases and leases of airport property and other facilities) contribute to the fact that it's extremely difficult for new competitors to enter the industry. Delta Air Lines shows the highest Return on Equity Ratio (23.57%) as compared to its competitors American Airlines (NASDAQ:AAL), United Airlines (NASDAQ:UAL) and Southwest Airlines (NYSE:LUV). This demonstrates that the company efficiently uses shareholders' equity in order to generate income. Its higher EBIT-margin (4.11%) as compared to competitors American Airlines (-3.54%) and United Airlines (-2.05%) is another indicator of the company's relatively strong competitive position. With an EBIT-margin of only 4.11%, Delta Air Lines has one of the highest margins compared to its competitors, which shows us that the margins in the airline industry are very low compared to other industries. It's an indicator that means we should be very cautious about investing in the airline industry and aware of the enormous associated risks. Declining revenues can cause airline companies to generate significant losses, which in turn increases the risk of bankruptcy. Delta Air Lines' Valuation Consensus EPS Estimates for Delta Air Lines are $5.33 for 2023. Using a 10x P/E Multiple (which is based on its Average P/E Non-GAAP [FWD] of 10.15 over the last 5 years) would result in a share price for Delta Air Lines of $53.30. At the company's current share price of $33.31, this would result in an upside of 60%. Delta Air Lines' P/E Ratio is 14.86, which is 15.65% below the sector median (which is 17.62). This provides us with an additional indicator that the company is currently undervalued. Delta Air Lines In Comparison To Some Of Its Competitors Delta Air Lines, Inc. American Airlines Group Inc. United Airlines Holdings, Inc. Southwest Airlines Co. Sector Industrials Industrials Industrials Industrials Industry Airlines Airlines Airlines Airlines Market Cap 20.98B 8.98B 12.06B 22.23B Employees 83,000 129,200 91,200 62,333 Revenue [TTM] 41.80B 40.72B 35.62B 21.15B Operating Income [TTM] 1.72B -1.44B -729.00M 1.27B Revenue Growth Rate 3 Years [CAGR] -2.93% -3.31% -5.71% -1.80% Revenue Growth Rate 5 Years [CAGR] 0.99% -0.35% -0.97% 0.34% Gross Profit Margin 16.33% 17.47% 23.87% 24.15% EBIT Margin 4.11% -3.54% -2.05% 5.98% Return on Equity 23.57% NM -27.54% 9.57% P/E GAAP [FWD] 14.86 NM NM 18.72 Dividend Yield [FWD] - - - - Payout Ratio - - - - Dividend Growth Rate 5 Years [CAGR] - - - - Consecutive Years of Dividend Growth 0 Years 0 Years - 0 Years Dividend Frequency - - - - Source: Seeking Alpha The High-Quality Company [HQC] Scorecard "The HQC Scorecard aims to help investors identify companies which are attractive long-term investments in terms of risk and reward." Here, you can find a detailed description of how the Scorecard works. Overview of the Items on the HQC Scorecard "In the graphic below, you can find the individual items and weighting for each category of the HQC Scorecard. A score between 0 and 5 is given (with 0 being the lowest rating and 5 the highest) for each item on the Scorecard. Furthermore, you can see the conditions that must be met for each point of every rated item." Source: The Author Delta Air Lines According to the HQC Scorecard Source: The Author According to the HQC Scorecard, Delta Air Lines has an overall score of 30 out of 100 points. This means it's classified as an unattractive investment in terms of risk and reward. Delta Air Lines fails to achieve a very attractive rating in any category. Only for Profitability (60/100) is it rated as attractive with a score of 60/100. This comes as a result of its relatively high Return on Equity of 23.57%. The company is rated as moderately attractive in terms of Economic Moat (40/100). In the categories of Financial Strength (35/100) and Growth (32/100) Delta Air Lines is rated as unattractive. For Valuation (16/100) and Expected Return (0/100), it receives a very unattractive rating. Delta Air Lines unattractive rating in terms of Financial Strength is particularly due to its high Debt to Equity Ratio of 883.52%, as well as a low Current Ratio of 0.66, low Quick Ratio of 0.53 and low Cash Ratio of 0.41. The company's unattractive rating in terms of Growth can mostly be attributed to having a low Average Revenue Growth Rate [FWD] of 4.88% and Average EBIT Growth Rate [FWD] of -7.47% over the last 5 years. This unattractive overall rating (30/100) in terms of risk and reward is a strong indicator that investing in Delta Air Lines comes with enormous risk factors. In my opinion, the reward is simply not worth the high risk. Therefore, Delta Air Lines receives my sell rating. Risk Factors I see a lot of different risk factors when evaluating whether to invest in Delta Air Lines or not: One of which is the company's high Debt to Equity Ratio of 883.52%, which demonstrates its high financial leverage. This high Debt to Equity Ratio is a strong indicator that investing in the company is a risk. Its low Current Ratio of 0.66, low Quick Ratio of 0.53 and low Cash Ratio of 0.41 are all indicators that the company could at some point have difficulties in meeting its short-term obligations.

	DAL	US Airlines	US Market
7D	-5.4%	-5.9%	-2.0%
1Y	-32.0%	-38.0%	-20.3%

DAL volatility
DAL Average Weekly Movement	5.5%
Airlines Industry Average Movement	6.7%
Market Average Movement	6.9%
10% most volatile stocks in US Market	15.8%
10% least volatile stocks in US Market	2.8%

DAL fundamental statistics
Market Cap	US$18.82b
Earnings (TTM)	US$600.00m
Revenue (TTM)	US$41.80b

DAL income statement (TTM)
Revenue	US$41.80b
Cost of Revenue	US$34.97b
Gross Profit	US$6.83b
Other Expenses	US$6.23b
Earnings	US$600.00m

Earnings per share (EPS)	0.94
Gross Margin	16.33%
Net Profit Margin	1.44%
Debt/Equity Ratio	634.1%

Delta Air Lines NYSE:DAL Stock Report

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Market Cap

7D

1Y

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DAL Stock Overview

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Delta Air Lines, Inc. Competitors

NYSE:LUV

US$19.2b

NYSE:ALK

US$5.1b

NYSE:CPA

US$2.7b

NasdaqGS:ALGT

US$1.4b

Price History & Performance

Recent News & Updates

Capital Allocation Trends At Delta Air Lines (NYSE:DAL) Aren't Ideal

Delta Air Lines To Thrive With New Consumer Protections

CEO & Director recently sold US$1.5m worth of stock

Certares-Led Reportedly Bid for Exclusive ITA Airways Talks

Delta Air Lines: Is The Reward Worth The Risk?

Shareholder Returns

Price Volatility

About the Company

Delta Air Lines, Inc. Fundamentals Summary

31.4x

0.5x

Earnings & Revenue