Delta Air Lines: Clear Skies Ahead

seekingalpha.com
7 min read
fairly easy
Travel is going to come back, Delta will as well, but it will be a new normal. Q2 should be the bottom, and Q3 will hopefully be the beginning of the travel rec
Q2 should be the bottom, and Q3 will hopefully be the beginning of the travel recovery. Investors must look beyond COVID-19 to see the true value.

The ongoing pandemic has been tough on industries around the world. One of the hardest hit has been the travel. This includes Delta Air Lines (NYSE:DAL). Most people will agree that travel will come back, the question that remains is how quickly. Delta is still down 60% from the beginning of the crash, but has rallied off the lows 50%+ before crashing again a few times. There are several logistical issues that Delta and all other airline companies will have to tackle, but they will adapt and overcome as travel demand picks up again. I am long Delta Air Lines as the economy looks to recover.

(Source: Google)

The New Normal

Concerning consumers' fear of flying, the biggest comparison that I can draw to is 9/11. We were setting record levels of travel pre-9/11. We did not reach these levels again until July 2004. That is almost three years after the dreadful incidents. Fear is a powerful tool and takes a long time for people to overcome, but they eventually do. (Source: Bureau of Transportation Statistics)

I do not anticipate that this is going to take quite as long to overcome, but there will no doubt be a considerable lag in reaching pre-COVID-19 levels. Boeing (NYSE:BA) CEO Dave Calhoun had this to say:

Something will happen when September comes around. Traffic levels will not be back to 100%. They won't even be back to 25. Maybe by the end of the year we approach 50. So there will definitely be adjustments that have to be made on the part of the airlines.

There's a large group of people that still want to travel, but their government won't allow them to do so. This is a multi-layered issue not only for Delta but also for all airlines. Something else to consider is how business travel is affected. I do not foresee very many companies encouraging travel anytime soon. Some key takeaways to keep in mind with regard…
Graham Grieder
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