Delta's (DAL) Shares Down 35.4% Since March: Here's Why

Shares of Delta Air Lines DAL have shed 35.4% of value since March compared with the industry’s 19.2% decline.

Reasons for Dismal Performance & the Way Forward

Like other airlines, Delta is reeling under the effects of the coronavirus pandemic. The demand scenario, which started deteriorating in late January, began to worsen in mid-March. This sharp drop in air-travel demand caused a 60% plummet in passenger revenues during the first six half of 2020. With traffic plunge outpacing the capacity reduction, load factor (percentage of seats filled by passengers) tanked 18 basis points during the first six months of 2020. Passenger revenue per available seat mile (PRASM) too tumbled 23% dive year over year during first-half 2020 to merely 11.9 cents.

Due to the drastic fall in demand, Delta suspended flights to 11 U.S. destinations from Jul 8 onward.  Coronavirus concerns are also affecting performance of Delta’s SkyMiles loyalty program. Due to weak travel demand, total miles redeemed in the first six months of 2020 declined by 78%.

For the third quarter, Delta expects to cut capacity by approximately 60% year over year. Anticipating continued weakness in demand and low capacity, the carrier parked approximately 40% of its mainline fleet.

Southbound Estimate Revisions

Thanks to deteriorating demand and uncertain economic uncertainty ahead, the Zacks Consensus Estimate for current-year bottom line has widened to a loss of $9.50 from a loss of $9.48 in the past 60 days.

Zacks Rank & Stocks to Consider

Delta currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Zacks Transportation sector are Knight-Swift Transportation Holdings KNX, United Parcel Service, Inc. UPS and Werner Enterprises WERN. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Knight-Swift, UPS and Werner is pegged at 15%, 7.7% and 8.5%, respectively.

These Stocks Are Poised to Soar Past the Pandemic

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United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
KnightSwift Transportation Holdings Inc. (KNX) : Free Stock Analysis Report
 
Werner Enterprises, Inc. (WERN) : Free Stock Analysis Report
 
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