Delta Air Lines was the first U.S. carrier to report third-quarter earnings this year, and despite rising costs putting pressure on the airline, strong travel demand helped its revenue and profit grow.
Since returning to the public market in 2007, Delta's stock has been a consistent performer, making it a win for those who invested 10 years ago. A $1,000 investment in 2009 would be worth more than $6,600, as of Oct. 10, 2019, for a total return of nearly 570%, according to CNBC calculations. In the same time frame, by comparison, the S&P 500 earned a total return of nearly 240%. The Atlanta-based airline's current share price is hovering around $54.
While Delta's stock has done well over the years, any individual stock can over- or underperform and past returns do not predict future results.
CNBC: Delta stock as of October 10, 2019.
Despite performing well in its third quarter, Delta's fourth quarter could be tough due to the airline's expectation that costs, excluding fuel, could rise as much as 5% year over year, CNBC reports. As J.P. Morgan analysts put it, Delta's prospects for the fourth quarter could be compared with "limping across the finish line."
Delta's stock has faced both ups and downs this year. In January, the shares tumbled almost 9% in one day after it predicted lower revenue growth. However, the stock is up almost 8% this year.
But going into the fourth quarter, many experts stand behind Delta, despite a lackluster forecast. Mark Tepper, CEO of Strategic Wealth Partners, said he's a fan of Delta's stock — as opposed to other popular U.S. airlines — for three main reasons.
For one, Delta doesn't fly the Boeing 737 Max, a type of airplane which has been grounded since March after two fatal crashes, Tepper said during a recent segment of CNBC's "Trading Nation." Two, it has "the best maintenance team in the industry," which helps extend the life of its aircraft, making it a good move financially. And three, Tepper supports Delta's partnership with American Express, which he calls "the gold standard," because it helps the company's bottom line.
Delta gained extra business while its competitors such as Southwest and American Airlines were forced to stop operating the Max and cancel thousands of flights. While Delta CEO Ed Bastian agrees the extra market share helped the airline's third-quarter performance, he doesn't believe "it was the main driver," Bastian said during a recent appearance on CNBC's "Squawk Box."
Earlier this month, Delta was named the "Best North American Airline" for the second year in a row at the 2019 Business Traveller Awards. Delta has also been recognized by multiple organizations worldwide for its dedication to sustainability. And on Oct. 6, in an effort to close the gender gap in aviation, Delta celebrated International Girls in Aviation Day by flying 120 girls ages 12 to 18 to NASA in Houston.
The company isn't without its struggles, however. In 2007, the airline exited bankruptcy following a 19-month restructuring that cost $3 billion. Delta's shares were delisted by the NYSE after the bankruptcy filing before the company went public again in 2007. To get back into the black, Delta cut its labor force by around 6,000 and added dozens of new international routes, among other things. In 2008, the carrier merged with Northwest Airlines creating the world's largest airline at the time.
Looking forward, Delta plans on meeting the increased demand for flights by hiring at least 12,000 employees through 2020. This will include pilots, flight attendants, ground staff and more, Bastian told "Squawk Box." "We're [in] the process of hiring 6,000 people this year and at least a like amount next year," he said. Given that Delta expects its costs to rise in the fourth quarter, some wonder how a massive amount of hiring will impact its threshold for extra expenses.
If you are considering getting into investing, experts, including Warren Buffett, often advise starting with index funds, which hold all of the companies in an index, such as the S&P 500. Because index funds fluctuate with the market and aren't tied to the performance of a single business, they're less risky than individual stocks, making them a safer choice for beginners.
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Disclosure: Strategic Wealth Partners holds DAL.
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