Delta Air Lines May Have Cleared the Turbulence

Amid the chaos of the novel coronavirus, it’s been difficult to distinguish between the airliners. From an outsider’s perspective, they have all looked terrible due to the pandemic. But recently, a heartening story regarding Delta Air Lines (NYSE:DAL) and its stand against racial discrimination may help move the needle for DAL stock.

a Delta (DAL) plane flying through the clouds
Source: NextNewMedia / Shutterstock.com

According to NBCNews.com, a Black woman named Demetria Poe was traveling to Washington, D.C. when a white woman wearing a Blue Lives Matter face mask approached Poe after their Delta flight had taken off. From Poe’s account, the other woman began making inflammatory comments, eventually leading other passengers to defend Poe.

In response, Delta upgraded the verbally harassed passenger’s return flight. Additionally, the airliner gave her a gift, which in part included a Black Lives Matter pin that Delta provides exclusively to its employees and associates, should they wish to wear it. Though perhaps a small gesture within a bigger picture, the matter could help positively distinguish DAL stock.

For one thing, Delta now has a track record of putting the customer first. According to StarTribune.com, the company will keep the middle seat blocked on its flights for the rest of the year. That’s a huge signal for the customer that may still be worried about the coronavirus. To be fair, Delta will make flights fuller, but nevertheless, the middle seat blockage is a massive PR win.

Second, DAL stock finds itself in an unprecedented situation. In an environment where every competitor must deal with a sharply reduced consumer base, little gestures – which may not have mattered in any other period – go a long way today.

Kudos to the management team for recognizing this.

Big Picture Fundamentals Moving Favorably for DAL Stock

According to information provided by Forbes’ contributor Dan Reed, the Covid-19 crisis took the air out of travel sentiment. Reed writes, “Only 6% of Americans say they expect to travel – by any means – this month, and just 9% say they plan to do so in October.”

“And, perhaps more sobering, most Americans have zero plans or expectations to travel on vacation all the way through the summer of 2021. That doesn’t mean they won’t do so, but at least right now, they have no such plans.”

This data came from IPX 1031, a financial advisory and exchange company. On the surface, the backdrop doesn’t look good for DAL stock. However, investors should consider additional context.

First, when it comes to air travel, the improvement is passenger volume is palpable. On Labor Day, the Transportation Security Administration screened over 935,000 passengers, representing nearly 41% of the capacity seen in the year-ago level. Now, there have been more than a few times when the year-ago comparisons hit 40% or higher.

Second, the August jobs report provided a big boost for DAL stock and other airliners. According to the U.S. Bureau of Labor Statistics, total nonfarm payroll employment rose by 1.4 million last month. Also, the unemployment rate dropped to 8.4%.

But it’s not just the headline numbers that is encouraging. Notable job gains occurred in retail, as well as leisure and hospitality. Thus, people aren’t just getting their jobs back. Rather, job growth is increasing in employment sectors that feature high-contact interfacing. Of course, this is huge for DAL stock as it demonstrates that consumers are gradually getting over their fears of the pandemic.

New Daily Cases Are on the Decline

Recently, White House health advisor Dr. Anthony Fauci caused a stir when he stated that a coronavirus vaccine is unlikely to be ready by election day. Instead, the more probable outcome is that a vaccine will be ready by the end of this year.

That’s not something the Trump administration wants to hear, especially when the political race is heating up. However, from the perspective of DAL stock, it might not matter.

For one thing, new daily coronavirus cases have declined substantially from their peak in July, according to data from the Centers for Disease Control and Prevention. This isn’t to say that cases won’t move higher, especially with flu season coming up. However, it appears that people are taking mitigation measures seriously.

And this segues into the second point: as health experts have suggested, we’re gradually learning to live with Covid-19. I’m glad to say that some of the hysterical outbursts that we witnessed earlier in the pandemic has gradually died down. Ultimately, this is a net positive for DAL stock as the underlying industry attempts a comeback.

On the date of publication, neither Matthew McCall nor the InvestorPlace Research Staff have (either directly or indirectly) any positions in the securities mentioned in this article.

Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/moneywire/2020/09/dal-stock-may-have-cleared-the-turbulence/.

©2021 InvestorPlace Media, LLC