DAL - Embedded Expectations Analysis - 2020 02 13
Delta Air Lines, Inc. (DAL:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 13.7x Uniform P/E, implying bearish expectations for the firm. However, management generated multiple excitement markers when discussing business class pricing and their Boston terminal, and are confident about their volume investments.Specifically, management generated an excitement marker when saying that in individual markets, the additional amount customers are willing to pay for business class may be greater than at a market basket level. In addition, they generated an excitement marker when saying they took back their terminal in Boston that was constructed and opened almost 15 years ago. Moreover, they are confident that heightened load factor expectations and 737 MAX delays created an environment where they had to reinvest to make sure they can handle volume from market share gains.
Delta Air Lines provides scheduled air transportation for passengers and cargo. The company serves the Transatlantic, Transpacific and Latin America markets directly on the company and through joint ventures with airline partners. Internationally, the company has hubs and market presence in Amsterdam, London-Heathrow, Mexico City, Paris-Charles de Gaulle and Seoul-Incheon. These arrangements are commercial joint ventures that include joint sales and marketing coordination, co-location of airport facilities and other commercial cooperation arrangements. The company has other businesses arising from its airline operations, including providing maintenance and engineering support for its regional aircraft.
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