You’re probably familiar with Delta Air Lines stock (NYSE: DAL) if you’ve ever flown for business or pleasure. Delta Air Lines is a widely recognized airline that connects passengers all over the globe. The company is one of the largest airlines in the world in terms of revenue.
According to Delta’s recently filed annual report, the company has five competitive advantages that support its trusted brand.
- People and Culture: Delta employees, provide world-class travel experiences for customers. Employees can give anonymous feedback on their daily jobs, benefits, and work environment. Glassdoor has recognized Delta as one of its Best Places to Work for six years in a row.
- Global Network: Delta and its alliance partners collectively serve over 130 countries and territories and over 800 destinations worldwide.
- Operational Reliability: In 2021, 88% of Delta’s domestic flights arrived on time. Delta is the Top US Airline of 2021 by the Wall Street Journal.
- Customer Loyalty: In 2021, corporate travelers rated Delta #1 in the annual Business Travel News Airline survey for the 11th year in a row. Customers show their loyalty by using Delta’s SkyMiles loyalty program, co-branded American Express card, and FlyDelta app.
- Financial Foundation: Delta raised its debt levels to stay afloat during the pandemic. The company has a goal to reduce debt. Since October 2020, the company has paid off creditors by about $12 billion. In addition, Delta contributed $1.5 billion to its employee pension plan.
Delta Air Lines Stock Earnings
On January 13, the company issued a press release announcing Delta Air Lines stock earnings for its fourth quarter and full-year 2021. The press release noted that sales were 57% recovered from pre-COVID 2019 sales. Also, capacity was 71% recovered. Adjusted operating sales for the year were $26.7 billion.
The press release also said the company had adjusted pre-tax loss of $3.4 billion. The adjusted number excludes one-time items like Payroll Support Programs, debt extinguishment, and profit-sharing payments. The company decreased adjusted expenses by 27%
Delta also fully funded its employee pension program and reduced financial obligations by $7 billion during the year. The company now has debt and finance lease obligations of $26.9 billion.
Delta and other airlines have struggled with flight cancellations and COVID-19-related travel restrictions since the onset of the pandemic. In response, Delta’s President Glen Hauenstein was quoted in the press release: “The commercial strengths we spoke about last month at Capital Markets Day are evident in our December quarter results. We ended December with revenues nearly 80 percent recovered to 2019 levels on strong demand and pricing during the holiday period, our premium products continued to perform well, we saw encouraging trends in business and international travel and our diverse revenue streams remained resilient.”
Delta’s management team will host a webcast to discuss the first quarter of 2022 results on April 13. A link to the webcast can be found here.
Delta Air Lines Stock Forecast
Analysts making Delta Air Lines stock forecasts predict the company will earn $1.54 in earnings per share in 2022. Although, six out of 10 analysts have lowered their predictions for the year over the last four weeks. The revised estimates may have something to do with Russia’s invasion of Ukraine.
Europe is a very popular tourist destination, and folks may be hesitant to travel during potential wartime. Increased tensions between the two countries have caused flight cancellations. Another issue for analysts is how long the war may last. If the feud gets more intense or last for a few years, Delta stock may keep struggling. If the war ends quickly, the stock could continue to recover from the pandemic.
Also weighing on analysts mind’s are fuel prices. Delta and other airlines buy jet fuel for their airplanes. Since Russia is a massive producer of the world’s oil, jet fuel has become much more expensive than in years. Delta stock may also suffer if fuel prices stay high or rise.
Delta’s full-year earnings press release also included an outlook for 2022. The company believes that flight capacity for the year will reach 83% to 85% of pre-COVID-19 2019 capacity. In addition, sales will increase to a range of 72% to 76% of 2019 sales.
Fuel price may seem like it would be hard to predict for the rest of the year, but Delta estimated jet fuel would be in the range of $2.35 to $2.50 per gallon for 2022. The company also estimates that it can reduce adjusted debt to $22 billion by the end of the year.
Is Delta Stock a Buy?
Investors might share concerns for Delta Air Lines stock in 2022. Fuel prices, flight cancellations and increased debt are risks that could cause the stock to fall. On the other hand, some of these risks could also go away soon. Optimistic investors might say that travelers are eager to get back to the skies. If that is the case, Delta stock could have a clear path to a full recovery from the pandemic.
BJ Cook is a long-time stock nerd. He has held several roles in the equity research world and earned the right to use the CFA designation in 2014. When he’s not writing for Investment U, you can find him searching for new investment ideas. Outside the investment community, BJ is a die-hard Cubs fan.
