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Can Delta Air Lines Benefit From the Lessons of 1918?

If there is any sector that could use positive news on the novel-coronavirus vaccine front, it’s the airlines. Among them, the case can be made that Delta Air Lines (NYSE:DAL) is one of the most desperate cases. Unlike Spirit Airlines (NYSE:SAVE), Delta is not a discount specialist, so it can’t just slash prices. And Delta promised to avoid putting passengers in the middle seat until early next year. Of course, that decision could hurt DAL stock.

So, it was a much-needed booster shot for Delta when Pfizer (NYSE:PFE) announced that its vaccine candidate was more than 90% effective. Logically, further tests and a peer review might push the effectiveness rate down.

However, safety is of paramount importance. In this area, Pfizer gains credibility because of its RNA-based vaccine. As you may know from biology classes, RNA primarily resides in the cytoplasm, not the nucleus, of cells. As a result, the RNA-based vaccine doesn’t interact with humans’ sensitive DNA, making it relatively safe.

Naturally, DAL stock jumped on Pfizer’s announcement, as did multiple other companies. Due to the poor management of the pandemic, Covid-19 cases have skyrocketed to ridiculous heights. Therefore, about the only way to mitigate this crisis is to distribute a viable and safe vaccine to the public as quickly as possible. Hopefully, that will spark a rebound of consumer sentiment.

That got me wondering; are there any historical events from which the owners of DAL stock can take encouragement? While evidence is scant, the 1918 influenza epidemic demonstrates that the broader transportation industry can recover quickly.

Back then, the main form of long-distance transportation was railways. So when the 1918 pandemic rippled through the U.S., killing about 675,000 Americans, you’d think that no one would want to be on crowded trains anymore.

However, that doesn’t appear to be the case. Unfortunately, historical records about this issue are extremely limited. Still, we can infer from the Roaring Twenties that people got over their fear of the pandemic. Will the same sentiment benefit DAL stock moving forward?

DAL Stock May Be a Victim of the Space-Time Continuum Disruption

In the movie Back to the Future Part II, the film’s time-traveling protagonists were undisciplined in their journey, allowing the movie’s antagonist to go back in time and change the future of his younger self. The protagonists went back to the present, only to discover that everything had changed.

I mention this because history tends to repeat itself. And one of the ways you can profit from stocks today is to speculate that history will  repeat itself or at least rhyme. But  taking this approach with DAL stock, based on the railroad industry’s quick recovery from the 1918 flu, may not be a good idea.

According to historical records collected by Railway Age, many American jurisdictions took the pandemic seriously, closing church, school, and entertainment venues. Additionally, many institutions distributed pamphlets urging sanitary practices and social distancing (although I don’t think it was called that at the time).

However, this time around, mitigation protocols have become politicized. And many government agencies resisted lockdown measures early in the crisis, leading to an even worse crisis now. Today I sympathize with the governors of states, who must now choose between saving lives and saving their economy.

Part of the tragedy is that it didn’t have to be this way. According to a February 2008 report from The Journal of Infectious Diseases, “stigma and fear can severely impede efforts to manage the spread of an outbreak of virulent influenza.” Rather than President Trump choosing to bring the country together, he instead encouraged and fueled stigmatization. As well, he downplayed the virus instead of being straight with the American people.

Honestly, I believe Trump could have been the greatest President in modern history because he had an opportunity to demonstrate leadership in the face of an unprecedented crisis. Instead, he continued to rampage on social media, turning off more than half of the nation.

To be fair, Trump was not the only one who failed; multiple government leaders did so also. Subsequently, on Nov. 12, new daily coronavirus cases reached nearly 195,000. That’s unreal. Sadly, it could get worse, which doesn’t bode well for DAL stock.

Lessons Not Learned

Typically, people learn from their mistakes. In many situations, though, they end up repeating them. But it takes a special kind of audacity to make the mistakes worse, taking a fight fire with fire approach but without bringing a scientific basis to the process.

That’s really where we find ourselves at this juncture. Rather than take the common-sense measures that America in the early 20th century implemented, we stuck our head further in the sand. Looking back, many people will poorly judge the Trump administration for not only ignoring safety protocols but openly mocking them as signs of weakness.

Ultimately, though, the bottom line is that we could have applied the hard lessons from our own past. Instead, we made the situation worse. Therefore, I wouldn’t bet on DAL stock because the railroad industry recovered after the 1918 pandemic. The two look similar but they’re on different dimensions of the space-time continuum.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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