Delta Earnings: Postpandemic Wanderlust and Pinched Capacity Offer a Rare Opportunity for Airlines

No-moat Delta reported passenger revenue 50% higher than the first quarter of 2019 on flight capacity essentially flat from that year (98.3%). However, the company's (and the industry's) operating costs have also swelled in the last three years, which suppressed profits in the quarter and disappointed investors who were expecting higher per-share earnings. We do not plan to change our $60 fair value estimate, and while we note that Delta's shares are undervalued, we don't believe the extraordinary tailwinds it is experiencing will persist indefinitely.