Delta Air Lines Share Price Forecast March 2022 – Time to Buy DAL?
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Shares of major United States airline carrier Delta Air Lines (NYSE: DAL) are in the red today, after closing at $39.92 as of February 28th (19:59 EST). Delta Air Lines shares were down 6% on Monday after the airline carrier suspended its codesharing agreement with Aeroflot, the Russian national airline. The airline industry suffered during the pandemic but bounced back early in 2021. This corresponded with the widespread availability of effective vaccines, which caused travel demand to increase. But this demand came mostly from domestic leisure travel and not the more lucrative international and business travel.
Delta Air Lines – Technical Analysis
According to the financial statement released by Delta Air Lines, the company’s market cap is at $25.546 billion with total assets worth $79.75 billion. Revenue for 2021 was at $29.90 billion with a profit margin of 0.94% compared to $17.09 billion in 2020.
Moving averages such as Exponential Moving Average (10)(41.44), Simple Moving Average (10)(42.09), Exponential Moving Average (20)(41.38), Simple Moving Average (20)(41.74) and Exponential Moving Average (30)(41.08) are indicating a sell action. Oscillators such as Relative Strength Index (14)(44.61), Stochastic %K (14, 3, 3)(40.76), Commodity Channel Index (20)(−85.43) and Average Directional Index (14)(17.35) are neutral.
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Recent Developments
Delta Air Lines planned to take the delivery of 66 new mainline jets annually in 2020, 2021, and 2022, with a total expenditure of $10 billion. This would put the annual CAPEX at over $4 billion, including non-aircraft spending. The pandemic changed all the plans, and the airlines deferred more than half of their planned 2020 aircraft deliveries, adding just 30 new mainline jets. Delta also reduced its planned CAPEX between 2020 and 2022 by over $5 billion, to safeguard its balance sheet. Delta can retire all of its 757s, 767s, and A320s by 2030 provided its cash flow and balance sheet recover from the pandemic as quickly as expected.
The Delta Air Lines Shares rally faded long before the current war-like scenario between Ukraine and Russia, losing about 10% in the second half of 2021. But airline investors must now consider a clouded outlook for the sector. Various concerns such as rising fuel costs and new uncertainty about international travel are being voiced. Delta Air Lines is currently well managed and ushered in a wave of reforms that allowed it to compete better with other discount carriers in the market.
Should You Buy DAL Shares?
Investors should note that long-term trends favour growth the most. The International Air Transport Association expects global travel volume to grow at a compound annual rate of 3.3% through 2040. However, this doesn’t mean that there is any quick turnaround. It has to be mentioned that the pandemic isn’t over. Investors got a shock last year with the emergence of the Omicron variant which negatively affected near-term travel demand.
Additionally, as the war between Ukraine and Russia surges on, the chances for the airline industry to normalise before 2023 seems bleak. Delta Air Lines has a lot of potential upsides, which should be considered by long-term holders. This is only applicable if they want to sit tight and ride through the turbulence in the market. However, given the situation of the world right now, there are also ample reasons why Delta Air Lines shares could go lower in the following months. Considering this, now is not the time to buy Delta Air Lines shares.
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