Delta Air Lines, Inc.

DAL Details

Delta Air Lines, Inc. (NYSE: DAL) provides scheduled air transportation for the passengers as well as cargo throughout the US and across the globe.

Financial Results (March Quarter 2023)

• The company has reported financial results for the March quarter as well as provided the outlook for the June quarter 2023. Talking about March quarter 2023 adjusted financial results, its operating revenue amounted to $11.8 Bn, reflecting a rise of 45% as compared to the March quarter 2022 and 14% higher than the March quarter 2019, including the 1-point impact from flying lower capacity than initially planned.
• Its operating income stood at $546 Mn with an operating margin of 4.6%
• DAL has delivered record March quarter revenue with total unit revenue that was 16% higher as compared to the same period in 2019. These results reflect the strength in the underlying demand environment as well as continued momentum in the premium products and loyalty revenue.

Key Update

New internal data from the global payment network UATP reflects that business travel is on its way to the full recovery, defying some predictions that it would take until at least 2024 for the complete comeback.

Outlook

For the June quarter, the company is expecting non-fuel unit costs to be 1% – 3% higher on the YoY basis. For the June quarter, the company is anticipating to deliver record revenue as well as an adjusted operating margin of 14%-16% with EPS of $2.00 - $2.25.

Key Risks

The rapid spread of the COVID-19 could significantly impact its broader operations. Notably, disruptions of IT infrastructure, failure of the technology, etc. are some additional risks the company is exposed to.

Fundamental Valuation

P/E Based Relative Valuation

Stock Recommendation

Over the last 6 months, the stock has given a return of ~16.6%. The stock has made a 52-week low and high of USD27.2 and USD40.34, respectively. The company’s performance is exposed to the risks related to the global slowdown as well as geopolitical tensions. Therefore, investors should exit the stock.

Hence, a ‘Sell’ rating has been provided on the stock at the closing price of USD39.11 per share, up by 2.3% as on 8^th June 2023.  

Technical Overview:

Daily Price Chart

DAL Daily Technical Chart, Data Source: REFINITIV

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.