{"id":58680,"date":"2023-06-13T22:01:51","date_gmt":"2023-06-14T02:01:51","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=58680"},"modified":"2023-06-13T22:21:19","modified_gmt":"2023-06-14T02:21:19","slug":"will-revenge-travel-keep-delta-air-lines-nyse-dal-stock-soaring","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2023\/06\/will-revenge-travel-keep-delta-air-lines-nyse-dal-stock-soaring\/","title":{"rendered":"Will \u201cRevenge Travel\u201d Keep Delta Air Lines (NYSE DAL) Stock Soaring?"},"content":{"rendered":"<p><a href=\"https:\/\/quotes.ino.com\/charting\/?s=NYSE_DAL\" target=\"_blank\" rel=\"noopener\">Delta Air Lines, Inc. (DAL) <\/a>reported a wider-than-expected loss for the first quarter 2023. However, the carrier\u2019s CEO, Ed Bastian, couldn\u2019t sound more optimistic about its prospects. Two factors drove this dichotomy.<\/p>\n<p>Firstly, the carrier cited its net loss of $363 million, or 57 cents per share, in what has seasonally been the weakest quarter of the year, partly due to a new, four-year pilot contract that includes 34% raises. Moreover, the bottom line is still an improvement over the net loss of $940 million, or $1.48 per share, during the year-ago period when travel demand was still recovering.<\/p>\n<p>Secondly, and more importantly, with the pandemic firmly in the rear-view mirror, consumers are ever keener to redeem their pile of airline miles on other travel rewards on their credit cards for new experiences through revenge travel. Revenge travel has its origins in \u201cbaofuxing xiaofei\u201d or \u201crevenge spending,\u201d an economic trend that originated in 1980s China when a growing middle class had an insatiable appetite for foreign luxury goods.<\/p>\n<p>Since e-commerce, albeit with a few hiccups in the supply chain, was able to satiate the appetite for goods through the pandemic, Americans are now going above and beyond to compensate for the years spent indoors trying to substitute real experiences with virtual ones.<\/p>\n<p>Even \u201cpent-up demand\u201d turned out to be an understatement when Ed Bastion and his team at DAL found the gap between inherent demand for U.S. travel that couldn\u2019t be met over the past three years, based on \u201cany kind\u201d of historical pattern to come in at $300 billion. The pleasantly surprised CEO revealed, \u201cWe\u2019ve had the 20 largest cash sales days in our history all occur this year.\u201d<\/p>\n<p>Even corporate bookings have been recovering, with domestic sales in March 85% back to 2019 levels. The carrier also got a boost in its loyalty program with the contribution from its co-branded credit card partnership with <a href=\"https:\/\/quotes.ino.com\/charting\/?s=NYSE_AXP\" target=\"_blank\" rel=\"noopener\">American Express (AXP) <\/a> coming in at $1.7 billion in the previous quarter, up 38% year-over-year.<\/p>\n<p>Because of this explosive demand, DAL has forecasted its top and bottom-line performance for the second quarter to exceed analysts\u2019 estimates. Mr. Bastion expects his airline to clock an operating profit of $2 billion, at par with Q2 of 2019, with lower capacity and higher fuel prices, while being the only airline with all the labor contracts in place.<\/p>\n<p>As a result, the Atlanta-based carrier expects sales in the current quarter to increase by 15% to 17% over last year, with adjusted operating margins of as much as 16% and adjusted earnings per share between $2 to $2.25.<\/p>\n<p>The confident CEO has also brushed off the potential consumer pullback in spending while expressing the conviction that pent-up demand for travel will be a multi-year demand set.<\/p>\n<p>According to him, revenue from premium cabins like the first class was outpacing the revenue from coaches, and while sales professionals have moved partially online, consulting and professional service have been the highest volume contributors. They are expected to remain so in the foreseeable future.<\/p>\n<h4>How the Market Reacted?<\/h4>\n<p>Quite positively, in a nutshell. DAL\u2019s stock has gained 20.5% over the past two months compared to 4.7% for the S&P 500. It is trading above its 50-day and 200-day moving averages and close to its 52-week high.<\/p>\n<h4>Pinch of Salt<\/h4>\n<p>\u201cIf something cannot go on forever, it will stop.\u201d The obviousness of this observation made by Herb Stein was what made it famous.<br \/>\nAt times such as these, when air carriers have turned to bigger airplanes, even on shorter routes, and jumbo-jets, such as the Boeing 747 and the Airbus A380, are being brought back to help ease airport congestion and work around pilot shortages, it is easy to get carried away by the \u201cpent-up demand\u201d and \u201crevenge travel\u201d narrative.<\/p>\n<p>However, it might be wise to consider certain things before indulging in the willful suspension of disbelief and extrapolating beyond the foreseeable future, like we are all guilty of doing in case of working from home, Great Resignation, and \u201cquiet quitting.\u201d<br \/>\nSince the rise of remote work and virtual teams, facilitated by contemporary collaboration and productivity tools, seems to have become an immune and immutable remnant of the cultural sea-change our work and lives had to adopt and adapt to during the pandemic, new reports give us reasons to doubt whether business travel is ever going back to normal.<\/p>\n<p>In such a situation, with traveling for leisure being an occasional indulgence in most of our lives, there are risks that the pent-up demand might not be enough to sustain the momentum that is propelling the growth performance of DAL and other airlines, which are primarily in the business of ferrying passengers.<\/p>\n<p>As far as the largest cash sales days are concerned, we can be certain that inflation would ensure that cash days in the future would still be larger.<br \/>\n Moreover, with ticket prices at all-time highs and JP Morgan and a few others predicting that the stash of pandemic stimulus cash, fueling the leisure travel boom, could run out over the next quarter, it is unsurprising to find tricks and trends, such as \u2018skiplagging\u2019 and consumers trading down on travel being on the rise.<\/p>\n<h4>Bottom Line<\/h4>\n<p>While DAL and its peers would want nothing more than for passenger demand to stay strong and, perhaps, keep growing, the most likely case would be a return to seasonality and cyclicality, as is typical of the airline industry.<br \/>\nHowever, the possibility of passenger demand falling off a cliff and investors rushing for the exits only to find that the clock struck midnight and the chariot turned back to a pumpkin can\u2019t be completely ruled out.<br \/>\nEither way, every flight that takes off has to land at some point. The only problem is that nobody knows exactly when.<\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Delta Air Lines, Inc. (DAL) reported a wider-than-expected loss for the first quarter 2023. However, the carrier\u2019s CEO, Ed Bastian, couldn\u2019t sound more optimistic about its prospects. Two factors drove this dichotomy. Firstly, the carrier cited its net loss of $363 million, or 57 cents per share, in what has seasonally been the weakest quarter [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":58683,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[31590,32173,32174],"class_list":["post-58680","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-american-express-axp","tag-delta-air-lines","tag-inc-dal"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Will \u201cRevenge Travel\u201d Keep Delta Air Lines (NYSE DAL) Stock Soaring? - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"description\" content=\"In this article, we have scrutinized the bullish sentiments regarding the prospects of Delta Air Lines (DAL).\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2023\/06\/will-revenge-travel-keep-delta-air-lines-nyse-dal-stock-soaring\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Will \u201cRevenge Travel\u201d Keep Delta Air Lines (NYSE DAL) Stock Soaring? - INO.com Trader&#039;s Blog\" \/>\n<meta property=\"og:description\" content=\"In this article, we have scrutinized the bullish sentiments regarding the prospects of Delta Air Lines (DAL).\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.ino.com\/blog\/2023\/06\/will-revenge-travel-keep-delta-air-lines-nyse-dal-stock-soaring\/\" \/>\n<meta property=\"og:site_name\" content=\"INO.com Trader&#039;s Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/inocom\/\" \/>\n<meta property=\"article:published_time\" content=\"2023-06-14T02:01:51+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-06-14T02:21:19+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2023\/06\/Untitled-design-33.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"The INO.com Team\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"The INO.com Team\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.ino.com\/blog\/2023\/06\/will-revenge-travel-keep-delta-air-lines-nyse-dal-stock-soaring\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.ino.com\/blog\/2023\/06\/will-revenge-travel-keep-delta-air-lines-nyse-dal-stock-soaring\/\"},\"author\":{\"name\":\"The INO.com Team\",\"@id\":\"https:\/\/www.ino.com\/blog\/#\/schema\/person\/d86a8cce826b7bd105200d88bb28a280\"},\"headline\":\"Will \u201cRevenge Travel\u201d Keep Delta Air Lines (NYSE DAL) Stock Soaring?\",\"datePublished\":\"2023-06-14T02:01:51+00:00\",\"dateModified\":\"2023-06-14T02:21:19+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.ino.com\/blog\/2023\/06\/will-revenge-travel-keep-delta-air-lines-nyse-dal-stock-soaring\/\"},\"wordCount\":957,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.ino.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.ino.com\/blog\/2023\/06\/will-revenge-travel-keep-delta-air-lines-nyse-dal-stock-soaring\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/wwwtest.ino.com\/blog\/wp-content\/uploads\/2023\/06\/Untitled-design-33.png\",\"keywords\":[\"American Express (AXP)\",\"Delta Air Lines\",\"Inc. 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