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Delta Air Lines Fills Middle Seats, Not Investors’ Pockets

Delta Air Lines (NYSE:DAL) stock opened April 6 at $50 a share. That puts DAL stock just 13% short of its pre-pandemic high.

Delta (DAL) airlines plane mid take-off
Source: Markus Mainka /

Since the beginning of 2021, the carrier’s shares are up 25% as investors ignore the balance sheet damage done by the pandemic. Instead they’re focused, as CEO Ed Bastian has said, on “reclaiming their lives.”

But the damage is real. Delta stock ended 2020 with long-term debt of $33 billion, against total assets of $71 billion and $14 billion in cash. The first quarter will still show a loss, expected to be $2.73 per share or about $1.7 billion, on revenue of $4.08 billion when it reports April 15.

DAL Stock Returning to Semi-Normal

Before the pandemic, Delta stock was paying a quarterly dividend of more than 40 cents a share. But the numbers make clear that’s not coming back soon. Investors looking for a return must find it in capital gains.

Those gains are now in the stock, which is running on optimism. The industry flew nearly 1.6 million passengers on April 2. Before the pandemic, the number was usually over 2 million. Leisure travelers are returning in big numbers, but business travel remains down.

This means Delta is a consumer stock, and a domestic airline. The airline will start filling the middle seats on its planes May 1, and is slowly restoring inflight services. News that the CDC says vaccinated passengers can travel safely sent shares up nearly 4% after the April 2 announcement.

But getting back to a new normal is a bumpy ride. Staffing issues caused 100 flight cancellations over the past weekend, and the airline responded by filling those dread middle seats. International travel will only return slowly, as Europe remains largely unvaccinated. Delta hopes to test its systems by adding service to Iceland this summer.

In the Barrel

Being a consumer airline puts Delta in the direct line of fire when controversy occurs. After a quiet, unsuccessful lobbying campaign by Delta and other businesses, for instance, Georgia passed a restrictive voting bill in March. Facing a boycott by opponents of the bill, CEO Bastian spoke out against it. In return he now faces a boycott from conservatives.

Being a consumer airline also means dealing with complex efforts to cut costs. Regular travelers are already plotting their low-cost return using frequent flyer miles. This will cut the cash Delta can draw from them, until the miles are exhausted. Credits for cancelling flights last year, due to expire after 12 months, are being extended into 2022.

Being a consumer airline also puts Delta in the line of fire over pandemic politics. The company hopes online tools will simplify the process of clearing international travelers. It has partnered with Clear, best known for getting people through security lines, on helping passengers bypass quarantines by proving they don’t have Covid-19.

The Bottom Line on DAL Stock

The easy money has been made on DAL stock.

Only nine of 16 analysts tracked by TipRanks are recommending you buy the stock now. Their average price target is just 3% ahead of current levels.

Once the airline has positive free cash flow, our Mark Hake expects the shares to take off. He expects that to happen in June or July. Many of the cost-cutting measures taken during the pandemic will be permanent, he wrote, meaning profitability will be enhanced.

I disagree. While the company will survive, as I wrote late last year, it has mortgaged its future. To be sure, that mortgage must be paid. There’s a euphoria around Delta stock right now, and that must be burned off as well. Even in flush times, airlines aren’t great stocks.

At the time of publication, Dana Blankenhorn owned no shares, directly or indirectly, in stocks mentioned in this story.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at, tweet him at @danablankenhorn, or subscribe to his Substack newsletter.

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