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Delta Air Lines Inc DAL

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The Delta Variant Slowed Delta's Recovery, but The Recovery Has Not Stalled; FVE Increased To $54.50

Burkett Huey, CFA Equity Analyst

Analyst Note

| Burkett Huey, CFA |

No-moat-rated Delta reported decent third-quarter earnings as the Delta variant surge in COVID-19 cases limited the business travel recovery, but the effects of the new variant were not as bad as consensus feared. Revenue of $9.2 billion beat FactSet consensus by 9.3% and EPS of $0.30 beat FactSet consensus by 96.6%. The two major stories were strengthening business travel demand due to office reopenings and cost inflation, particularly for labor and fuel. We are increasing our fair value estimate to $54.50 from $52.50 as we continue to believe the firm has structurally improved its non-fuel cost base and we expect softening oil prices in the long term.

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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.

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