How Should Investors Approach DAL Stock as Government Shutdown Ends?

The longest federal government shutdown in U.S. history finally came to an end after President Donald Trump signed a spending bill. The 43-day shutdown caused financial stress for federal workers who went without paychecks, stranded scores of travelers at airports, among other difficulties.

With multiple flights being cancelled, airlines, including Delta Air Lines DAL, have been hit hard thanks to staffing shortages and bad weather. The prolonged shutdown left air traffic controllers unpaid and air traffic control operations strained. We remind investors that while the shutdown was in progress, the Federal Aviation Administration had announced to reduce flight capacity at 40 major U.S. airports. Following the end of the shutdown, DAL expects to restore full capacity over the next few days as the holiday season approaches.

Even though flight cancellations may still continue, the situation is a much-improved one, following the end of the shutdown. This is a welcome sign for airlines, including DAL, as the holiday season is a very busy time for airlines, with passenger traffic swelling during that period.

With the shutdown ending and DAL expected to start operating at full capacity shortly, let's delve deep to examine the investment worthiness of Delta currently.

DAL’s Impressive Price Performance

Despite the government shutdown-associated ills, shares of DAL have performed impressively over the past six months, gaining in double digits, and outperforming the Zacks Transportation - Airline industry and fellow airline operator American Airlines AAL. United Airlines UAL has performed even better in the timeframe.

6-Month Price Comparison

The improvement of air travel demand this year has served Delta well, as highlighted by its third-quarter 2025 results released last month. With the government shutdown ending and the holiday season approaching, upbeat passenger volumes are expected to lead DAL to further prosperity.

Taking a Sneak Peek Into DAL’s Q3

Delta’s third-quarter 2025 earnings (excluding 46 cents from non-recurring items) of $1.71 per share beat the Zacks Consensus Estimate of $1.52. Earnings increased 14% on a year-over-year basis.

Revenues in the September-end quarter were $16.67 billion, beating the Zacks Consensus Estimate of $15.79 billion and increasing 6.4% on a year-over-year basis. Due to improving air-travel demand, adjusted operating revenues (excluding third-party refinery sales) increased 4.1% year over year to $15.2 billion. 

Delta’s diversified revenue base grew in double digits year over year, contributing to the top-line growth. Premium revenues grew 9 % year over year, with improvement across all products. Loyalty revenues also increased 9% as SkyMiles members continued to deepen engagement beyond flight. Corporate sales increased 8% year over year.

The earnings beat in the September quarter enabled Delta to maintain its excellent earnings surprise record. DAL’s earnings have outpaced the Zacks Consensus Estimate in the past four quarters. The average beat is 8.9%.

Delta Air Lines Price and EPS Surprise

Delta Air Lines, Inc. price-eps-surprise | Delta Air Lines, Inc. Quote

Other Factors Favoring DAL

Strong Financial Returns for Shareholders: Highlighting its shareholder-friendly stance, DAL’s management announced a 25% hike in the quarterly dividend payout this year. This was the second dividend increase announced by Delta since its resumption of quarterly dividend payments following the COVID-induced hiatus.

In June 2024, management announced a 50% hike in its quarterly dividend payout. Under the CARES Act, airlines were prohibited from paying dividends or buying back shares till Sept. 30, 2022. Following the most recent increase, the new quarterly dividend becomes 18.75 cents per share (annualized 75 cents). Dividend-paying stocks like DAL are generally safe bets for creating wealth, as these payouts act as a hedge against economic uncertainty, which characterizes current times.

Low Fuel Costs: The southward movement of oil prices bodes well for the bottom-line growth of Delta. This is because fuel expenses are a significant input cost for airlines. Crude oil has been struggling in 2025, with prices sliding to multi-month lows. Notably, DAL witnessed a steep decline in expenses on aircraft fuel and related taxes in the September quarter. With oil prices moving south, the average fuel price per gallon (on an adjusted basis) in the third quarter declined 11% year over year to $2.25. 

Impressive Valuation: DAL is currently trading at a discount compared with industrial levels. The carrier is currently trading at a forward 12-month price to sales (P/S) of 0.61X. This figure is lower than its industry average but higher than United Airlines and American Airlines. DAL currently has a  Value Score of A, like American Airlines and United Airlines.

DAL’s P/S F12M Vs. Industry, AAL & UAL

How Should Investors Play DAL Stock Now

Agreed that DAL’s valuation is attractive and its shareholder-friendly approach is encouraging too, but high labor costs continue to hurt the carrier’s prospects. Highlighting the fact, salaries and related costs increased 7% year over year in the first nine months of 2025. DAL is burdened with rising non-fuel unit costs as a result.

Primarily due to the increase in salaries and related costs, non-fuel unit costs were up 2% in the first nine months of 2025. Moreover, even though the shutdown has ended, the situation remains uncertain, with flight cancellations likely to continue.

As a result, we believe prospective investors should exercise caution and wait for a more favorable entry point. For existing investors, holding onto this Zacks Rank #3 (Hold) stock appears to be a prudent choice currently.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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