Here's Why Investors Should Hold Onto Delta Air Lines Stock Now

Delta Air Lines’DAL top line is benefiting from its customer-friendly initiatives. The airline’s proactive measures to expand and upgrade its fleet are praiseworthy. However, DAL has been grappling with weak liquidity and increased operating expenses.

Factors Favoring Delta Air Lines

Delta Air Lines’ expanded partnership with Italian fashion house Missoni brings elevated luxury and comfort to its Delta One premium cabin, focusing on enhancing the in-flight sleep experience. Launching this summer on international routes and rolling out fleetwide by year-end, the collaboration introduces a new Missoni-designed bedding set crafted to enhance comfort and style on long-haul flights. Later this year, Delta will launch upgraded amenity kits in collectible Missoni-designed bags with curated travel essentials. Such customer-focused initiatives are enhancing Delta’s brand appeal and strengthening its competitive edge in premium air travel.

DAL's robust expansion measures are commendable, as it adds more than 52 nonstop routes across the region to cater to the rising demand for leisure travel to tropical destinations. By increasing flight options from key U.S. cities like Austin, Nashville, TN, and Raleigh-Durham, NC, to popular Caribbean and Latin American spots such as Cancun, Nassau and San Juan, Delta is significantly enhancing convenience for travelers. Expanded service from hubs like Detroit and Boston, including daily nonstop flights from Boston to St. Thomas during the holiday season, strengthens Delta’s position in the leisure travel market and offers customers greater flexibility and access to sun-soaked escapes.

Delta’s commitment to rewarding its shareholders via dividends and buybacks is encouraging. In the first half of 2024, the airline announced a 50 percent increase in its quarterly dividend, beginning in the September quarter of 2024. This was the first dividend increase announced by DAL since its resumption of quarterly dividend payments last year following the COVID-19-induced hiatus. The new quarterly dividend has become 15 cents per share (annualized 60 cents per share).

Delta Air Lines: Key Risks to Watch

High operating expenses are adversely impacting Delta Air Lines’ bottom line. This surge in operating expenses is driven by the increase in labor costs.

In the first quarter of 2025, labor costs, comprising salaries and benefits (accounting for 30.3% of the total operating expenses), rose 8% year over year to $4.1 billion.

Delta Air Lines exited the first quarter of 2025 with a current ratio (a measure of liquidity) of 0.38, raising liquidity concerns. A current ratio of less than 1 indicates that the company does not have enough cash to meet its short-term obligations.

Shares of Delta Air Lines have declined 18.4% year-to-date compared with its industry’s 7.8% fall.

DAL’s Zacks Rank

DAL currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Investors interested in the???Transportation sector may also consider Copa Holdings CPA and Ryanair RYAAY. 

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

CPA has an expected earnings growth rate of 14.3% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 5.5%. Shares of CPA have risen 23.7% year to date. 

RYAAY currently sports a Zacks Rank of 1.  

RYAAY has an expected earnings growth rate of 30.5% for the current year. The company has a mixed earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, delivering an average beat of 46.6%. Shares of RYAAY have rallied 29.4% year to date. 

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

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