Positive Outlook: Delta Air Lines
Delta
stocks are trading 50% off their peak prices. The airline has greatly suffered
from the effects of COVID-19 and is now gradually recovering. Delta has
recently presented a positive forward guidance for 2023-2024. If the
expectations of the company’s management become a reality, DAL stock prices may
rise significantly.
Market cap
of Delta is rising ahead of the market as fuel prices are going down and travel
activity is rising. However, there is plenty of room for stock prices to go up.
One of the major drivers is rising passenger traffic that is expected to add
8-9% this year compared to the prepandemic 2019. The company expects that the
demand for business travel will expand despite recession expectations. So,
Delta expects to get EPS at $5.5 in 2023 and $7.00 in 2024 that is above Wall
Street expectations at $4.80 and $5.60 respectively. These expectations are
strongly linked to new airliners purchases like Airbus A321 and Boeing 737 MAX
10, and also to the increasing number of intercontinental flights.
The company
is planning to reduce costs by 5-7% in 2023 and by 2-3% more in 2024. The
efforts are extremely valuable considering persisting high inflation that is
likely to prompt the revision of contracts with pilots in terms of higher
salaries.
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