Delta Air Lines Stock Looks Attractive

ATLANTA, GEORGIA, UNITED STATES – 2019/11/08: The Delta Airlines logo can be seen at Hartsfield-Jackson Atlanta International Airport… [+]. (Photo courtesy of Getty Images/Alex Tai/SOPA Images/LightRocket)
Getty Images/SOPA Images/LightRocket
Despite a significant recovery in domestic air travel demand, Delta Air Lines’ (NYSE: DAL) stock remains 25% below pre-Covid levels. Domestic business accounts for over 78 percent of total revenue, and passenger numbers at TSA checkpoints are currently 20 percent lower than in 2019. Furthermore, the US government’s third wave of payroll assistance is supporting employee salaries and minimizing losses through September 30, 2021. The business reported a $3.1 billion operating cash outflow during the pandemic, far less than the $10 billion drop in DAL stock’s market valuation. As a result, Trefis believes the company can see significant increases as investors overlook pandemic losses. Pick Delta Airlines Stock Over Southwest Airlines Stock To Extend Gains emphasizes the important elements in favor of DAL stock’s upside. Our interactive dashboard compares the stock performance of Delta Air Lines during the present crisis to that of the 2008 recession. Coronavirus Pandemic in 2020
So far, the timeline for the 2020 crisis is as follows:
Coronavirus cases are first reported in China on 12/12/2019.
The World Health Organization (WHO) announces a global health emergency on January 1, 2020.
2/19/2020: The S&P 500 reaches a new high thanks to signs of effective control in China and expectations of monetary easing by major central banks.
3/23/2020: The S&P 500 index falls 34% from its peak on February 19, as Covid-19 instances spread outside of China. It doesn’t help that oil prices plummeted in mid-March as a result of a Saudi-led price war.
From March 24, 2020: As the Fed’s multi-billion dollar stimulus program calms near-term survival concern and pours liquidity into the system, the S&P 500 recovers 91 percent from its lows on March 23.

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Here’s how DAL and the broader market fared throughout the 2007/2008 financial crisis.
Timeline of the 2007-2008 Financial Crisis
ADDITIONAL INFORMATION FOR YOU
1/10/2007: The S&P 500 index reaches an approximate pre-crisis high.
9/1/2008 – 10/1/2008: Market downturn accelerates in response to Lehman Brothers’ bankruptcy filing (9/15/08).
3/1/2009: The S&P 500 index appears to have reached a bottom.
1/1/2010: Initial return to pre-accelerated drop levels (about 9/1/2008).

Performance of Delta Airlines vs. the S&P 500 During the financial crisis of 2007-2008,
The shares of DAL fell from over $18 in October 2007 (pre-crisis high) to around $5 in March 2009. (as the markets bottomed out). However, following the 2008 financial crisis, the stock rose considerably to around $11 in early 2010, with a gain of 126 percent between March 2009 and January 2010. In instance, the S&P 500 Index first plunged 51% after the recession, before recovering 48% by January 2010.
Prior to the Pandemic, Delta Air Lines’ fundamentals were stable.
Delta Air Lines had a 14 percent increase in revenue from $41 billion in 2017 to $47 billion in 2019, thanks to increased capacity and ticket rates. Furthermore, due to decreasing operating costs and interest charges, the company’s margins rose. As a result, the EPS increased by 64% from $4.45 in 2017 to $7.32 in 2019. The company’s revenues declined by 60% (year over year) in 2020, as capacity (ASMs) fell by 51% and the passenger load factor dropped to 55%.
CONCLUSION
The stages of the Covid-19 problem are as follows:
Early to mid-March 2020: Fears of a rapid spread of the coronavirus outbreak become reality, with the number of patients increasing globally.
From late March 2020 onwards, social distancing measures and lockdowns will be implemented.
April 2020: The Federal Reserve’s stimulus reduces near-term survival anxiety.
May-June 2020: Demand recovers, with lockdowns gradually lifted – little panic, but a continuous increase in the number of cases.
Since the end of 2020: Market mood is buoyed despite weak quarterly results, as demand continues to grow and vaccine development progresses.

Another round of payroll support, as well as the ongoing demand recovery trajectory, are major drivers of Delta Air Lines stock’s strong upward trajectory.
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