Author Topic: DAL - Delta Airlines  (Read 4750 times)

shalab

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DAL - Delta Airlines
« on: March 03, 2018, 07:22:33 PM »
DAL looks like a buy at these prices. Berkshire owns 53 million shares.

Morningstar says ...

"Delta remains one of the best-managed airlines, with the highest operating margins among U.S. network carriers, a clean balance sheet, and a commitment to returning 70% of its free cash flow to investors. Thanks to significant industry consolidation, Deltaís operating margins should remain positive across the full cycle; this signals a clear break with much of the industryís history, which featured boom-bust cycles."

In addition, the shares outstanding have decreased from 850 million to 707 million in the past five years with six million bought back in the last three months alone.

The company also operates its own gas refinery which gives it some advantages.

Although 2017 was a down year compared to 2016, 2018 is looking up.  Tax cuts are also helping as more money will go to the bottom line.


Snorky

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Re: DAL - Delta Airlines
« Reply #1 on: March 09, 2019, 04:36:24 AM »
Do i see it right that Buffett bought nearly 5 mio shares and exceeded the 10% mark, although he said he donít want it on airlines because of the regulatory issues?


https://www.sec.gov/Archives/edgar/data/27904/000120919119018303/xslF345X03/doc4.xml



gfp

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Re: DAL - Delta Airlines
« Reply #2 on: March 09, 2019, 07:11:42 AM »
That's right - he went over 10% on Delta.  He's apparently willing to deal with the reporting requirements (filing within a few days when he goes to sell his first share).  It's not like the Bank holding company rules, its a self imposed limit so he can buy and sell without notifying the world immediately.

gfp

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Re: DAL - Delta Airlines
« Reply #3 on: March 09, 2019, 08:01:35 AM »
The author of this weekend's Barron's article on Delta must feel pretty vindicated.

SwedishValue

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Re: DAL - Delta Airlines
« Reply #4 on: March 22, 2019, 02:01:03 AM »
I believe this topic needs some more love. Especially considering Buffett owns big stakes in all four airlines, just purchased enough shares to put him above the self-imposed 10% limit, and considering the significantly different economic outcome for all the airliners during the past couple of years.

I'm looking through earnings transcripts and other material, if anyone has some special insight to share or discuss I would be happy to be suggested more reading material :)

Spekulatius

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Re: DAL - Delta Airlines
« Reply #5 on: March 22, 2019, 04:02:29 AM »
The fact that he holds stake in many airlines means that he is unlikely to complete take over one, I think. I agree this topic should get more love.
To be a realist, one has to believe in miracles.

SwedishValue

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Re: DAL - Delta Airlines
« Reply #6 on: March 22, 2019, 04:43:47 AM »
One thing I remember from a CNBC interview, is Buffett saying he wouldnít rule out owning an airline. There have been calls for further consolidation as well, I donít know if another big merger would be possible from a regulation perspective, but if Buffett wanted to he could finance such a merger. Maybe itís even the elephant that got away?

I agree with you however, that the prospects for an outright acquisition of an airline has decreased materially since Buffett filed for his increased delta stake.

gfp

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Re: DAL - Delta Airlines
« Reply #7 on: March 22, 2019, 05:10:51 AM »
Delta certainly seems underpriced on an earnings basis and has been aggressive in repurchasing shares.  Recently, Warren seems to be buying any time the share price dips to 50 or below.  We'll see very soon if he resumed his share purchases on this recent dip below 50.  Delta, of course, doesn't have any of the Boeing 737 Max variants.

https://www.sec.gov/cgi-bin/own-disp?action=getissuer&CIK=0000027904

gfp

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Re: DAL - Delta Airlines
« Reply #8 on: July 11, 2019, 05:38:13 AM »
https://s2.q4cdn.com/181345880/files/doc_financials/quarterly_results/2019/q2/Delta-Air-Lines-Announces-June-Quarter-Profit.pdf

I own a fair bit of this one.  People are always lamenting how high the "market" is priced but you have plenty of pockets like Delta that just do not seem overpriced to me. 

Quote
Increases full year earnings guidance to $6.75 to $7.25 per share
Board of Directors approves 15% increase to company’s quarterly dividend


Quote
The fact that he holds stake in many airlines means that he is unlikely to complete take over one, I think. I agree this topic should get more love.
Remember how the railroad basket worked out.  Not sure any of the airlines would be 'for sale' in their entirety at anywhere close to these prices, but I don't think it's all that unlikely that Buffett would buy one up whole.

Quote
I agree with you however, that the prospects for an outright acquisition of an airline has decreased materially since Buffett filed for his increased delta stake.
The rise above 10% was supposedly accidental, but the only thing it really changes is that it will be harder for Berkshire to sell DAL, as the market will be notified within 3 days of the first share sale.  If selling it is less palatable, might as well make an offer for the other 89%
« Last Edit: July 12, 2019, 06:08:23 PM by gfp »

bizaro86

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Re: DAL - Delta Airlines
« Reply #9 on: July 11, 2019, 08:15:41 AM »
Would WEB buy DAL, where the credit card feal with Amex is probably maximized, or buy UA, where there is probably lots of upside to their deal with JPM? Seems like he might like the one with the future lever to pull.

OTOH, DAL probably has the best customer service reputation among the big 3 legacy carriers.