Delta Air Lines, Inc. (DAL) – Stock Report Date: December 28, 2024

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Highlights:

• 12-Month Target Price: $82.00 (11x CY 2025 EPS estimate of $7.42).
• Recommendation: Strong Buy.
• Key Metrics:
  • Recent Stock Price: $61.26 (as of Dec 27, 2024).
  • Trailing 12-Month EPS: $5.59.
  • Market Capitalization: $40.01 billion.
  • Dividend Yield: 0.96%.
  • Beta: Average.
• Performance Trends:
  • Q3 2024 Seat Miles: +4% YoY.
  • Total Revenue per Seat Mile: Declined slightly but offset by premium (+4.4%) and loyalty travel rewards (+8.4%).
  • Expected Revenue Growth: +4.6% in 2024, +1.5% in 2025.

Financial Summary:

Revenue (Million USD):

Year	Q1	Q2	Q3	Q4
2025E	13,885	16,825	15,912	15,016
2024	13,748	16,658	15,677	14,650
2023	12,759	15,578	15,488	14,223

Earnings Per Share (USD):

Year	Q1	Q2	Q3	Q4
2025E	0.81	2.67	2.04	1.89
2024	0.45	2.36	1.50	1.71

Investment Rationale:

1. Operational Strength: Delta leads in EBIT margins, maintains a conservative balance sheet, and has demonstrated robust resilience against macroeconomic pressures.
2. Market Positioning: Benefits from premium pricing and a diversified customer base, with strong domestic travel offsetting international normalization.
3. Growth Prospects: Targeting mid-teen operating margin expansion and 10% EPS growth annually for the next five years.
4. Risk Mitigation: Owning a refinery division shields DAL from volatile fuel costs, adding a strategic edge in cost management.

Risk Assessment:

Key Risks:

• Recession: Potential demand shocks could affect revenue streams.
• Cost Pressures: Higher fuel and labor expenses may compress margins.
• Supply Chain Delays: Aircraft delivery issues could constrain capacity.

Mitigation Strategies:

• Strategic cost reductions via proprietary oil refinery operations.
• Diversification into premium segments less impacted by economic downturns.

Industry Outlook:

• Market Trends: Resilient consumer demand, with domestic travel normalizing and international travel softening post-pandemic peaks.
• Growth Drivers:
  • Corporate travel recovery anticipated.
  • Air cargo demand expected to expand as supply chains diversify.
  • Increasing adoption of premium travel products.
• Challenges: Competitive pricing dynamics and rising operational costs.

Quantitative Evaluations:

Key Ratios:

Metric	2023	2022	2021
Price/Sales	0.45	0.42	0.84
Price/EBITDA	3.20	3.64	NM
Net Margin (%)	7.94	3.83	NM

Growth Rates (Past):

Period	Net Income (%)	Sales (%)
1 Year	249.7	14.76
3 Years	NM	50.3

Corporate Information:

• CEO & Director: E. H. Bastian.
• President: G. W. Hauenstein.
• Headquarters: Atlanta, Georgia.
• Founded: 1924.
• Employees: 103,000.

Analyst Notes:

• December 5, 2024: Raised target price to $82, reflecting positive domestic travel trends and resilient consumer demand.
• November 7, 2024: Target price raised to $66 following favorable regulatory and industry developments.

Glossary:

• EBIT: Earnings Before Interest and Taxes.
• EPS: Earnings Per Share.
• FCF: Free Cash Flow.
• P/E Ratio: Price to Earnings Ratio.