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Delta Air Lines Inc DAL

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Delta Sees Near-Term Return of Business Travel Due to Return to Office; FVE Lowered to $52.50

Burkett Huey, CFA Equity Analyst

Analyst Note

| Burkett Huey, CFA |

No-moat-rated Delta Air Lines reported considerably improved sequential revenue metrics in its June quarter as the airline benefits from the U.S. economy’s reopening, but increased fuel costs and network rebuilding expenses, such as maintenance from bringing aircraft out of storage and training, weighed on profitability. We generally think these rebuilding expenses will be one-time expenses in Delta’s cost structure and continue to believe that the carrier has permanently improved its cost structure due to pandemic-related restructuring. We are decreasing our fair value estimate by about 4.5% to $52.50 per share from $55 to account for Morningstar’s assumption of higher corporate taxes in the model and as we increase our near-term assumptions on fuel expense considerably to reflect higher oil spot prices.

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Company Profile

Business Description

Atlanta-based Delta Air Lines is one of the world's largest airlines, with a network of over 300 destinations in more than 50 countries. Delta operates a hub-and-spoke system network, where it gathers and distributes passengers across the globe through key locations in Atlanta, New York, Salt Lake City, Detroit, Seattle, and Minneapolis-St. Paul. Delta's sale of frequent flier miles, particularly to American Express, is a major driver of the firm's profits.

Contact
Post Office Box 20706
Atlanta, GA, 30320-6001
T +1 404 715-2600
Sector Industrials
Industry Airlines
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 74,000

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