Delta Earnings On Deck After TSA Screens Record 3M Passengers: Analyst Says Airline Has 'Insulation' To Industry Issues

The COVID-19 pandemic, among other headwinds, sent the airline industry reeling after 2020.

While Delta Air Lines, Inc. DAL has outperformed competitors American Airlines Group Inc AAL, Southwest Airlines Co LUV and JetBlue Airways Corporation JBLU, it still has much to prove ahead of its second-quarter earnings.

Meanwhile, new data from the TSA is an encouraging sign for the industry’s recovery.

The Delta Analyst: According to a Monday note, Bank of America analyst Andrew G. Didora holds a Buy rating for Delta with a price target of $55.

Main Takeaways: Didora said Delta will “set the tone” for the airline industry when it reports earnings on Thursday, July 11. While the Atlanta-based airline is down 12% since its mid-May peak (due to concerns over domestic capacity and negative guidance revisions by competitors), the analyst believes that Delta benefits from its business model’s resiliency.

“While DAL is not immune to these industry dynamics, we believe its premium, corporate, and international exposures allow the airline to navigate these issues better than others,” Didora said.

Didora is encouraged by the company signaling that it will prioritize using free cash flows to pay down debt as a risk mitigant.

The analyst raised second-quarter EPS estimates from $2.25 to $2.41.

Industry Recovery: Investors received other positive news for the airline industry from the TSA.

Over 3 million passengers were screened at TSA checkpoints throughout the U.S. on Sunday, July 7. The figure is a new record, beating the previous mark set on June 23. The record was surely helped by the Fourth of July holiday weekend.

BREAKING NEWS: TSA Officers have set a new record for most travelers screened in a single day! On Sunday, July 7th, 3,013,413 people were screened at checkpoints nationwide, surpassing the previous record set on June 23, 2024. Traveling soon? Be sure to arrive early. Have travel… pic.twitter.com/uBTuhtMBQH

— TSA (@TSA) July 8, 2024

TSA screenings are not only a proxy for the health of the airline industry but consumer confidence as a whole. Flying is now well above pre-COVID levels per a post on X.

"The TSA has daily data for the number of people scanning their boarding pass with a TSA agent, and it continues to show no signs of the economy slowing down" – Apollo's Slok pic.twitter.com/T4ZKwYcgXz

— Sam Ro 📈 (@SamRo) July 5, 2024

Betting markets peg TSA check-ins to average 2.76 million from July 8th to July 14th.

Price Action: Delta traded at $46.87, up 1.12% at the time of writing.

Now Read:

• How Boeing’s Guilty Plea Could Impact US Defense Contracts

Image: Shutterstock