- The ongoing global IT outage caused by a defective CrowdStrike update has forced Delta Air Lines (NYSE:DAL) to cancel more than 6,000 flights since Friday, though the stock has been noticeably resilient
- What’s the case for investing in Delta stock today?
- Delta is a global airline operating more than 4,000 daily flights to more than 290 destinations across six continents
- Delta Air Lines stock has given back 8.15 per cent year-over-year and 29.84 per cent since 2019
The ongoing global IT outage caused by a defective CrowdStrike update has forced Delta Air Lines (NYSE:DAL) to cancel more than 6,000 flights since Friday, though the stock has been noticeably resilient.
Delta shares have given back only 3.5 per cent since Friday’s market open, even though the outage, which affected only Windows-based computers, has left the airline with half of its IT systems compromised and unable to staff its flights because of a malfunctioning crew tracking tool.
Crew tracking issues are expected to last into next week, and have led to about US$163 million in lost revenue to date from the outage, according to Savanthi Syth, an airline analyst at Raymond James, with that number likely to rise after factoring in passenger compensation, staff incentives – including premium pay until July 26 – as well as potential fines from the U.S. Department of Transportation (USDT).
While Delta has been forced to manually reset its affected computer systems, thousands of passengers and employees around the world have been faced with lengthy delays, unexpected costs, and even overnight airport stays, putting the airline’s industry leading on-time performance, as detailed in its Q2 2024 results, into serious peril.
Should you buy Delta stock?
Delta’s long-term investment prospects are supported by a leading 17.8 per cent share of the U.S. air travel market as of April 2024, according to the USDT. This is in addition to:
- Profitability that has returned to pre-pandemic levels, posting US$4.6 billion in net income in 2023, slightly down from US$4.76 billion in 2019.
- 25-year Delta veteran Ed Bastian as chief executive officer.
- An airline industry tailwind marked by an estimated 4.3 per cent annual growth rate over the next 20 years.
While profits have returned to 2019 levels, the stock remains down by almost 30 per cent in comparison, positioning investors to capitalize on optimism about solving the IT issue over the short term, as well as management’s expectations of further growth in profitability through this year, as the airline regains customer trust and improves efficiencies towards greater free cash flow generation.
About Delta Air Lines
Delta is a global airline operating more than 4,000 daily flights to more than 290 destinations across six continents. The airline served more than 190 million customers in 2023.
Delta Air Lines stock (NYSE:DAL) is down by 0.5 per cent, trading at US$43.61 per share as of 10:36 am ET. The stock has given back 8.15 per cent year-over-year and 29.84 per cent since 2019.
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