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Why Delta Air Lines Shares Are Rising
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Why Delta Air Lines Shares Are Rising
Sep 26, 2024 9:32 AM

Delta Air Lines, Inc. ( DAL ) shares are trading higher by 6.09% to $51.72 during Thursday’s session following news that Southwest Airlines Co ( LUV ) introduced a new $2.5 billion share repurchase program.

What To Know: Southwest's ( LUV ) repurchase plan, alongside its enhanced growth projections and cost-saving initiatives, signals broader optimism for the airline industry's recovery and profitability. Delta, as one of the leading carriers in the U.S., could see increased investor interest as competitors like Southwest ( LUV ) aim for financial efficiency and stronger earnings growth.

Southwest's ( LUV ) expectation of delivering $4 billion in incremental EBIT by 2027 and achieving a 15% or greater return on invested capital underscores the financial health and long-term profitability of major airlines, fostering a more favorable perception of the sector.

Read Also: Treasury Bond ETF Under Pressure Ahead Of Key Inflation Data: What Investors Should Know

Delta also stands to benefit from the same industry tailwinds that Southwest ( LUV ) is leveraging, particularly as both companies share similar challenges and opportunities. The lowering of fuel costs, a key factor in Southwest's ( LUV ) guidance adjustment for economic fuel costs per gallon, suggests an improved cost environment for all carriers.

What Else: Moreover, Southwest’s focus on operational efficiency—through hiring control, scheduling optimization, and supply chain opportunities—sets a precedent for other carriers like Delta to continue driving their own efficiency initiatives.

Delta's ability to manage costs while enhancing its customer experience has been a key pillar of its business strategy, and investors may view Southwest's ( LUV ) news as an industry-wide validation of the growing profitability potential for major carriers.

Delta, which has long emphasized premium service and product differentiation, may benefit from this shift as more airlines adapt to evolving customer expectations. Any moves by competitors to enhance customer satisfaction can encourage broader investment in the sector, as carriers look to attract a loyal customer base and boost long-term revenue.

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How To Buy DAL Stock

By now you're likely curious about how to participate in the market for Delta Air Lines ( DAL ) – be it to purchase shares, or even attempt to bet against the company.

Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy ‘fractional shares,' which allows you to own portions of stock without buying an entire share. For example, some stock, like Berkshire Hathaway, or Amazon.com, can cost thousands of dollars to own just one share. However, if you only want to invest a fraction of that, brokerages will allow you to do so.

In the the case of Delta Air Lines ( DAL ), which is trading at $51.29 as of publishing time, $100 would buy you 1.95 shares of stock.

If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to ‘go short' a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.

According to data from Benzinga Pro, DAL has a 52-week high of $53.86 and a 52-week low of $30.60.

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