Let’s not even sugar coat it. Delta Airlines is hurting maybe more than any other business in this pandemic. Almost all flights are at a halt. Money is being lost, workers are getting laid off and furloughed. The stock has plummeted and is cut in half. There’s no end in sight. Who would be crazy enough to touch this stock? I’m thinking that I am. And here’s why.
Effects From the Virus
The airline business is hurting possibly the most of any other industry right now. Delta is burning $60 million per day. They’re in a tough spot because they only have a little under $3 billion in cash but $17 billion in debt. They did receive a multi billion dollar stimulus. But that is to pay employees through September 2020 and the rest of it is in loans. Delta plans on cutting its workforce and making the company smaller. Delta has suspended their dividend for the foreseeable future. Warren Buffett even sold 18% of his stake in the company. There’s no end in sight to all of this and no one knows when traveling will pick back up again. There’s a possibility that Delta may need another stimulus package.
Why am I an Investor?
First of all, people will travel again! There will be a point where this will all be forgotten. Not only people will travel, but they will have pent up angst to travel. Being in my mid-30’s, I have time on my side. I would be very surprised if the government lets them fail. Delta has been ranked the number one airline company by numerous sources, including the Wall Street Journal. Getting Delta at $30, $25, $20 a share in my eyes is a great deal. Even though they’re not paying a dividend right now, I am now buying this company as a growth company and am looking forward to making money through appreciation. And if they pay a dividend again(which they will), that will just be a bonus.
If Delta Airlines bounces back it make take a few years. I was thinking about Warren Buffett’s famous line “be fearful when others are greedy and be greedy when others are fearful”. Does this apply to the Oracle of Omaha himself? Do we dare be greedy when he’s fearful? He is the greatest investor of all time. The GIOAT! He preaches investing in great companies. Isn’t Delta a great company that is just the victim of an unusual circumstance? We shall see. I am an investor in Delta and am comfortable with them right around 6-7% of my portfolio.