Delta Air Lines (DAL) Expands Its Reach into South America

Business Insider

21-04-2025

Delta Air Lines (DAL) has announced a major step forward in its global expansion strategy, focusing on new routes and partnerships across South America. This move is a step toward addressing the softness in the domestic market that the company has experienced, while tapping into the resilience of international travel, a segment growing at twice the rate of the company's overall revenue growth. Investors will be keenly watching to see if this can help turn the stock's fortunes around, as it has declined by over 32% so far this year.
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New Routes Bring Strategic Partnerships in the Region
Delta's expansion includes additional routes to key South American destinations, with a focus on connecting major U.S. cities to bustling hubs like São Paulo, Buenos Aires, and Santiago. These added flight options aim to make travel more convenient for business professionals, tourists, and families alike. The benefit is clear for passengers—more flights mean greater flexibility, better connections, and increased opportunities to explore some of the world's most vibrant cities.
Strengthening its presence further, Delta has solidified partnerships with regional carriers like LATAM Airlines. This collaboration provides seamless connectivity to smaller markets within South America, complementing Delta's expanded route network. For travelers, this means easier access to destinations previously only reached with multiple connections, saving time and offering a smoother travel experience.
Delta is also investing in increased capacity to meet the growing demand for flights to South America. By utilizing their modern fleet effectively, the airline can remain competitive with other global brands.
Navigating Operational Challenges
Operational challenges can arise with any expansion, such as increased flight frequency, potentially leading to congestion or delays, especially at a major hub like Atlanta. However, Delta consistently leads in on-time performance and flight completion rates, indicating strong operational management.
Further, despite growth in capacity and frequency, Delta has maintained industry-leading operational performance and managed to keep non-fuel unit cost growth low. This suggests that efficiency gains and careful scheduling can offset some negative impacts of increased frequency.
Is Delta a Buy?
Analysts following the company have been constructive on its prospects, despite several adjusting price targets downward. For instance, Raymond James analyst Savanthi Syth reduced the price target for Delta from $62 to $60, while maintaining a Strong Buy rating, noting Delta plans to cap second-half 2025 capacity growth to protect margins and cash flow, despite a no-growth environment. She further observed that Delta's unique structural advantages support its margin advantage over legacy peers.
Similarly, Morgan Stanley's Ravi Shanker adjusted his price target from $95 to $88 while keeping an Overweight rating on Delta's shares. Despite the market's anticipation of a significant downturn in airline stocks, Ravi has indicated that Delta's status updates show that trends are merely stalling, contrary to more severe expectations. The firm is viewed as a high-quality, long-term investment despite prevailing uncertainties in the outlook. He maintains investor confidence in Delta as a potential long-term winner in the industry.
The average price target for DAL stock is $60.00, representing a potential upside of 46.88% from current levels.