Right now, Delta Air Lines seems almost out of style. Delta sat in Atlanta, announced a dividend, beat earnings, and watched its stock close Monday at $68.20—barely moving, almost stubborn—while United was making headlines for its merger and American was openly closing doors. That kind of silence begins to feel like a statement in a field that has been characterized by drama this spring.
Most analysts were surprised by how clean the Q1 results were. Revenue increased by almost 13% year over year to $15.85 billion. At $0.64, earnings per share were three cents higher than anticipated. The kind of beat that keeps institutional investors comfortable but doesn’t make the front page. Anchyra Partners, Concurrent Investment Advisors, Elevated Financial Group, and Federated Hermes have all maintained their comfort levels. It looks like a roll call of funds that increased their Delta positions during the fourth quarter. Approximately 69.93% of the stock is currently held by institutional investors, indicating that the smart money hasn’t backed down.
However, it is difficult to ignore the other side of the ledger. In late February, CEO Edward Bastian sold 100,000 shares at an average price of $70.26, or roughly $7 million. Earlier that month, EVP Alain Bellemare sold more than 35,000 shares. In the middle of April, EVP John Laughter sold 15,000 shares. Insiders moved 353,611 shares totaling about $25.18 million during the last quarter. A portion of that is standard. Executives pay taxes, fund mortgages, exercise options, and diversify. Nevertheless, you have two distinct theories about the same stock when the funds are net buyers and the company’s owners are net sellers. Both could be correct.
The macro image won’t cooperate. Since the Strait of Hormuz lit up in late February, crude oil has been moving closer to $100 per barrel, and jet fuel, the most dependable villain in the airline industry, has more than doubled in some markets. But there’s an odd logic at play here. Everyone is negatively impacted by rising fuel prices, but low-cost carriers are more negatively impacted and are forced to reduce capacity. Spirit is having problems. JetBlue is currently trading for less than $5. With their corporate contracts and premium cabins, some analysts now contend that Delta and United actually gain from the industry’s thinning. Yields increase. Pricing power comes back. The menu is chosen by the survivors.
Compared to the low-cost airline model, Delta’s premium strategy—the lounges, the Comfort+ seats, and the constant push toward “experience” rather than just transportation—has held up better. You can see what Bastian created if you stroll through Concourse F at Hartsfield-Jackson on any weekday morning: families waiting in line for international gates, business travelers using Sky Club, and the constant buzz of an airline that long ago realized that flying coach to Newark was a commodity but flying lie-flat to Tokyo wasn’t. It appears that investors still think this moat is intact.
Wall Street is mostly in agreement. In early April, Citigroup increased its price target to $79. Bank of America maintained the buy rating despite a minor reduction to $78. The majority of Wolfe Research, HSBC, BMO, and Bernstein continue to refer to it as outperforming. At $79.10, the consensus target suggests significant growth from current levels. In that sentence, “implying” is obviously doing a lot of work. Goals are reduced. Oil shocks do not go away. The great unknown is the demand for summer travel.
Watching Delta this year gives me the impression that insider trades or quarterly earnings aren’t the main focus of the story. It concerns whether the airline industry has at last figured out how to withstand a shock without collapsing. Compared to 2008, Delta’s balance sheet is now stronger. Compared to 2020, its premium revenue is more stable. It’s genuinely unclear if that will be sufficient to get through whatever is still planned for 2026.