Delta Air Lines, Inc. (NYSE: DAL)
· Consensus EPS Estimate for Q2 2020 is -$4.15
· Consensus Revenue Estimate for Q2 2020 is $1.42B
· EPS Revisions the past 90 days include 4 upward and 11 downward
Delta Air Lines DAL is scheduled to report second-quarter 2020 results on Jul 14, before the market opens. Demand for flying is steadily increasing amid declining fear about the novel coronavirus. That bodes well for Delta stock.
Delta’s cash burn has tremendously decreased and is quite manageable. Also, the recent spike in coronavirus cases in a few locations is not going to result in the type of all-encompassing closures we experienced earlier this year, and a vaccine looks poised to be unveiled sooner than many expect.
Passenger Traffic Recovery and DAL Stock
As InvestorPlace’s Mark Hake discussed Jun 30, passenger traffic continues to trend higher. Sure, it remains far below where it was a year ago. But still, this slight improvement means a passenger traffic recovery remains in motion.
Yet, this may not be enough. Domestic leisure traffic may be picking up. But the same can’t be said about international and business travel. It’s not just health concerns from travelers hurting demand. EU travel restrictions are another factor keeping this lucrative segment of air travel at depressed levels.
With business travel, corporate America now has virtual alternatives to in-person meetings and conferences. It’s debatable whether this will cause a secular decline in business travel. But, it’s a negative factor the industry doesn’t need right now.
In short, everything hinges on going full-steam ahead with the domestic traveler market. Yet, while it’s easy to focus on the negatives, these risks do not necessarily mean Delta’s financial performance can’t continue to improve. (By Thomas Niel Jul 9, 2020)
Economies Won’t Be Closed
For many reasons, the current rising number of coronavirus cases, in all likelihood, will not result in massive closures of non-essential businesses again. First of all, thankfully, death totals, even in the affected states, have generally been below the levels that we saw in April and May.
Moreover, I think that policymakers realize that the closures were very destructive in many ways. Of course, the closures were horrible for the economy. But additionally, I’ve seen various data points indicating that the lockdowns caused large increases in suicides and drug overdoses, while the fear they inspired led many people to avoid getting treated for life-threatening illnesses.
And finally, there’s evidence that the closures did not work. For example, Sweden, which never imposed a lockdown, had a coronavirus death rate of 527 per million as of the morning of July 2, while Michigan, which imposed one of the strongest lockdowns in the U.S. and probably the world, had a fatality rate of 621 per million.
I believe this is the first time in history that extensive lockdowns were tried as a means of combating a pandemic. I think government officials will realize that the results indicate that they were not effective and were certainly not worth the trade-offs.
In the future, officials will employ other measures, including limited closures of certain problematic activities such as bars and large indoor gatherings, along with mask requirements and measures to protect the vulnerable. But they will not resort to massive closures.
Consequently, Delta and other airlines will not again see the massive decline in demand that they experienced earlier this year. (By Larry Ramer, InvestorPlace Contributor)
Keeping all these things in mind, We think DAL stock will be neutral to bullish.