Today, Delta Air Lines (NYSE:DAL) is one of a number of major carriers under pressure. Currently, DAL stock is down a little more than 4%, on heavier-than-usual trading volume.
So what is going on today? Airline stocks have presented an interesting play on economic reopening in the last year. These have been volatile equities, driven by investor sentiment and expectations of when the economy would fully recover. While I’m one of many who have been off with predicting just how long Covid-19-related mandates would continue and international borders would remain closed, there’s still a strong reopening thesis underpinning DAL stock and its peers right now.
However, global uncertainty is starting to weigh on this view. Ongoing Russia-Ukraine tensions have given investors pause. For airline stocks, this has resulted in a number of consequences that have taken Delta Airlines and its peers on a turbulent ride.
Let’s dive into what investors are watching with Delta stock today.
DAL Stock Down on Codeshare Suspensions
Today, Delta Air Lines announced the company would be suspending a key codeshare agreement with a Russian airline. Aeroflot, one of the top carriers in Russia, is a company Delta has done business with for some time. While Delta does not operate flights to Russia or Ukraine, its codesharing agreement allows it to market and sell seats on flights operated by Aeroflot. The Russian carrier then has the same rights via Delta. Today, the U.S. airline suspended this arrangement.
The international routes covered in this codeshare agreement appear to be ones investors seem to believe fuel the overall reopening thesis.
However, given the recent Russian invasion of Ukraine, Delta has sought fit to put this agreement aside. Sometimes, bigger issues are at play than profitability. And in this case, Delta appears to feel that backlash from doing nothing may be worse than continuing to service these routes.
Investors should note that Delta is also moving down alongside peers, who have chosen to restrict flights from Europe. As InvestorPlace contributor William White wrote earlier, there are also concerns that Russia will start to block incoming flights.
While investors wait to see how things unfold, uncertainty is getting the best of DAL stock today.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
