DAL Stock: Delta Air Lines Will Keep Gaining Altitude in 2015

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Delta Air Lines, Inc. (NYSE:DAL) stock should fly high this year for a number of reasons, including flight additions and new flier accommodations.

DAL Stock: Delta Air Lines Will Keep Gaining AltitudeLast quarter, Delta Air Lines beat analyst estimates on both the top and bottom lines, including 6% growth in revenues. DAL stock was unsurprisingly lifted by that news, and looking ahead, many expect Delta to continue impressing.

Several analysts have upgraded DAL stock on continued belief in the stock. Here are some of the reasons Wall Street is increasingly bullish on Delta:

Expansion Plans

Delta Air Lines will expand its operations in high-demand locations Hawaii and Alaska that are expected to generate substantial revenue.

Delta will add a nonstop flight from Seattle-Tacoma International Airport to Kona, Hawaii, and expand Alaskan flights by adding daily nonstop flights to Fairbanks and Juneau, Alaska. Delta’s additions will compete with Alaska Air Group, Inc. (NYSE:ALK), whose key markets are in Alaska and, more surprisingly, Hawaii.

Additionally, Delta will add daily flights to Palm Springs, California and Tucson, Arizona, which was previously only running on Saturdays.

Customer Accommodations

Delta Air Lines also will add new accommodations in hopes of attracting more fliers, specifically those in business class.

Delta’s partnership with aero-communications provider Gogo Inc (NASDAQ:GOGO) will give fliers quicker Internet speed on longer domestic flights as well as international flights.

Gogo will install 2Ku technology in Delta aircraft, offering quicker speeds and more bandwidth compared to Gogo’s original air-to-ground technology. This should be especially attractive to business class fliers, whom Delta Air Lines has been targeting through a branding re-launch that also includes includes new quilted seat covers, free drinks and more overhead bin space.

Fuel Costs

Delta, like many other airlines, makes hedges against oil prices by buying in bulk. However, because of the hedges, the massive dip in oil prices in late 2014 turned into a lost opportunity to save even more on fuel. Fortunately, this year Delta still plans on having a year-over-year benefit of $500 million in the first quarter of 2015 since fuel prices remain low.

Meanwhile, DAL will keep ticket prices consistent, which should add up for Delta as long as fuel prices continue to hold at their current low levels.

Bottom Line

Delta’s past excellent operational performance shows the company’s reliability. Last year, 99.8% of Delta’s scheduled flights were completed and 85% of its flights were on time, excluding winter storms.

Low fuel costs should continue to buoy Delta, as should its efforts to lure in more lucrative business-class travelers.

The very bullish analysts have this one right: DAL stock is poised to hit even higher altitudes in 2015.

As of this writing, Dana Kobilinsky did not hold a position in any of the aforementioned securities.

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