How to Buy Delta (DAL) Stock

Delta Air Lines has proven to be a resilient corporate entity throughout its 91-year existence. From bankruptcies to mergers and acquisitions, the company has endured in good times and bad times, in wartime and in peace. Delta rebounded even after its stock delisted in 2005 after a tough period and relisted in 2007 — and even had its best 12-year stretch in its history. 

By the end of 2019, Delta will have generated more cash flow than any other year in its history. Needless to say, the company is on the upswing. Read on to see if Delta stock is for you.

Delta Company and Stock History

Delta (NYSE: DAL) is one of the premier commercial airline carriers in the world. Collett E. Woolman founded the company in 1928, but passenger transport was not the initial focus. Huff Daland Dusters, the precursor to Delta, began as a crop-dusting operation, primarily eliminating pesky insects from Georgia peach orchards and cotton fields in neighboring southeastern states. It was the first commercial aerial agricultural company in existence.   

The rebranded company transported its first passengers, going from Texas to Mississippi. The company later began transporting mail for what was then known as the Post Office Department. After legislation turned over mail delivery to private businesses, Delta’s service stalled. With a new Post Office contract in 1934, the company resumed passenger service and became operating as Delta Air Lines. 

Delta later served in the war effort and the years following had several firsts in the industry. During the 1950s, the company spearheaded the use of airline hubs — a centralized airport for passengers to connect to other Delta flights. 

Several mergers and acquisitions occurred over the next 50 years, including with Chicago and Southern Air Lines in 1953, Northeast Airlines in 1972 and Northwest Airlines in 2007. Each transaction expanded the company’s reach and fueled its growth. That growth includes servicing nearly 200 million passengers each year on more than 15,000 daily flights, with its 80,000 worldwide employees overseeing it all. It also services 304 worldwide destinations in 52 countries.

Delta’s growing business hasn’t come without major stumbling blocks. In 2005, the company filed for Chapter 11 bankruptcy. It cited increased fuel costs, legacy payments and competition from low-fare carriers as the predominant reasons. Its domestic competitors — Northwest Airlines, United Airlines, US Airways — also filed during that period. The post-September 11, 2001 economic environment wreaked havoc on the airline industry. 

On October 13, 2005, the New York Stock Exchange (NYSE) delisted Delta Air Lines stock. The company stock had listed at under $1 per share for 30 consecutive days, falling short of the Exchange’s listing standards.  

It wasn’t until April 2007 that the NYSE relisted Delta stock. It closed at $20.91 on its debut, just as the global economy began its descent courtesy of the great recession. But by March 2008, Delta stock was trading just above $4. The per-share price stayed below its relisted debut for the next 5 years, failing to close above $20 until July 2013. Since then, however, Delta stock has had a steady climb. As of mid-September, its stock had increased by more than 180% to around $59 per share. 

Future Outlook for Delta

Delta Air Lines has posted impressive numbers for the past 2 quarters. The first quarter of 2019 ended with Delta earning $10.4 billion in revenue, an increase of 7.5% from 2018. Second-quarter earnings totaled $12.5 billion, which marked the highest quarterly result in the company’s history. 

The company continues to strengthen its defense against unforeseen economic conditions, as 55% of its revenue now comes from non-ticket sources. That number is up from less than 40% in 2011. Company executives feel strongly that such independence from potential customer volatility provides financial stability in any fiscal environment.  

Currently, Delta’s financial solvency places it in a strong position moving forward. The company generated $2.5 billion in free cash flow during the first half of 2019 — more than what it produced in all of 2018. The company is using this surplus to improve the customer experience, strengthen its brand and ensure employees have the tools necessary to deliver the service that passengers have come to expect.

The company also intends to invest over $12 billion in terminal facilities over the next 5 years while putting resources behind fortifying customer-facing technology, including its website and Fly Delta app.

Why Delta Stock?

Delta Air Lines is a global brand with nearly a century of business history. Those observations alone make the company’s stock an intriguing option. Here are several reasons why you should consider purchasing Delta stock.

International Alliances 

Agreements and joint ventures with foreign carriers, including Air France-KLM, Virgin Atlantic, Virgin Australia, Korean Air, among others, help strengthen Delta’s global reach while accessing international markets in a way that adds long-term value to the brand.

Lengthy Corporate History 

With more than 90 years in business, Delta has a long history for investors to scrutinize before making a decision. It creates an informed investor, which should be the ultimate goal whether you purchase Delta stock.

Upward Trajectory 

As referenced above, the company just completed its most successful quarter with revenue totaling $12.5 billion. And by all accounts, Delta is flush with cash. Either way, the airline seems well-positioned as it moves toward the future.

Expanding Industry 

In addition to the 2nd quarter being Delta’s best from a revenue perspective, it also marked the highest load factor in the company’s history: A record 53.9 million passengers flew on Delta. 

Why Not Delta Stock?

Delta’s stock has maintained strong momentum over a sustained period. The company has strong financials and it’s an industry leader. In spite of those strengths, there are some things you should be mindful of before purchasing Delta stock. 

Highly Regulated Industry

The Federal Aviation Administration often issues regulations and policies for maintaining and operating aircraft. Additional operating expenses usually accompany these directives, which can directly affect the bottom line.

Reliance on 3rd-Party Carriers

Delta partners with several 3rd-party carriers to supplement the company’s operations. If these providers encounter challenges that ultimately jeopardize their agreement, it can adversely impact Delta’s business dealings. If it spans an extended period, these challenges, which are usually out of Delta’s control, could potentially increase costs while decreasing revenue.

Negative Publicity From Safety Issues

Like all commercial carriers, Delta puts a strong emphasis on safety. But if one of its aircraft or 3rd-party carriers is involved in an accident, it fuels a negative perception about flying, which could harm the company’s reputation and its business.  

Labor-Related Disruptions

Roughly 83,000 full-time employees, or about 18% of Delta’s workforce, are unionized. They include pilots, flight attendants and air dispatchers. The airline industry is labor-intensive, and it often relies on a harmonious relationship among the various unions and the airline. If a work stoppage occurs due to contractual disagreements, it will directly affect Delta’s ability to conduct business. 

How You Can Buy Delta Stock

Gathering information on how to purchase Delta stock is not a difficult step to take, nor is the process of buying the stock itself. It’s an easy-to-follow process that puts you in control. You can compare it to the steps involved with purchasing Nintendo stock.

Best Brokers for Delta Stock

Delta Stock: A Synopsis

The most enduring corporate brands usually have compelling stories that include overcoming tough times. Throughout Delta’s 91-year history, it has stood on the brink on several occasions. But disciplined and principled leadership led the company out of despair, to the point where it is now an industry leader on solid economic footing. 

Delta’s outlook is positive: It has significant cash on hand, its quarterly earnings are on the uptick, and company leaders invest in the business components that fuel future growth and differentiates it from competitors. It all adds up to a company with an optimistic outlook — one that appears to be a sound choice to invest in.