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Delta Air Lines stock is gaining momentum on improving demand

Delta Air Lines stock is gaining momentum on improving demand

Delta Air Lines (NYSE: DAL) stock price regained upside momentum over the past thirty days amid improving air passenger demand. The steep decline in the cash burn rate is among the factors behind the latest rally. Delta stock price soared almost 14% in the last thirty days. Despite the latest bull-run, the shares of the second-largest US airline are still down more than 40% year to date.

Delta has slashed third quarter expense target by 50% compared to the past year quarter while the daily cash burn rate dropped to almost $27 million.

DAL Delta Air Lines, Inc. daily Stock Chart
Delta Air Lines stock performance. Finviz chart.

Although the passenger airline expects the September system capacity to drop by 60% from the past year period, the capacity rate improved significantly when compared to the second quarter this year. The company has also parked almost 40% of its mainline fleet.

Moreover, U.S. Global Investors stated that airline industry passengers have reached 807K level early this month. The report also suggests investors buy the airline stocks before the full recovery. Delta Air Lines stock price is currently trading around $33, down almost by half when compared to a 52-week high of $62 a share.

“We believe a return to the post-pandemic high of 863,000 could spur a second big wave of airline equity buying, making now a potentially opportune time to consider getting exposure. What’s more, carriers are either extending or putting in place new policies to restore confidence in air travel and lure passengers back into seats,” the report says.

The airlines are likely to get more support from the US government. President Trump has recently said that the government is planning to provide more support to the passenger airlines.

“We’ll be helping the airlines, you have to help the airlines, it’s a tough business always is. Airlines are a tough business in good times and we are about ready to get back to good times,” stated Trump to the press today.

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Siraj is a finance writer based in Saudi Arabia with a strong understanding of and passion for the stock market, cryptocurrency, economics, and finance. He has worked for international clients for many years on several projects related to the stock market, equity research, accounting, and finance. Siraj is a published financial analyst on some of the largest finance websites.