Why Delta Air Lines Stock Is Up By 9% Today

Key Insights

• Airline stocks enjoy strong support at WTI oil attempts to settle below the $95 level.
• Delta Air Lines says that demand stays strong and customers are ready to pay higher fares.
• Traders should pay attention to the dynamics of Delta Air Lines’ earnings estimates.

Delta Air Lines Stock Rallies As WTI Oil Tests The $95 Level

Shares of Delta Air Lines gained strong upside momentum as WTI oil declined below the $95 level amid hopes for progress in Russia – Ukraine negotiations. Other stocks in the airline segment, like United Airlines Holdings or Southwest Airlines, are also moving higher in today’s trading session.

Airline stocks have taken a significant hit when WTI oil moved towards the $130 level, but the recent strong pullback in the oil market has finally provided material support.

Oil is moving lower as sanctions on Russia did not lead to a complete halt of Russian energy exports, and it looks that energy markets are relieved that the worst-case scenario has not materialized.

It is not surprising to see that Delta Air Lines stock rallied after oil settled below the psychologically important $100 level as energy prices are a key component of the company’s costs.

What’s Next For Delta Air Lines Stock?

Analyst estimates for Delta Air Lines’ earnings have been moving lower in recent weeks due to higher oil prices. Currently, Delta Air Lines is expected to report earnings of $1.65 per share in 2022 and $5.52 per share in 2023, so the stock is trading at 6 forward P/E for 2023.

Today, Delta Air Lines noted that customers were still willing to pay higher prices due to pent-up demand for international travel. These comments provided additional support to Delta Air Lines stock. However, it remains to be seen whether they will provide enough support to analyst estimates which may continue to move lower despite the recent pullback in the oil market as oil prices remain at high levels.

In the near term, Delta Air Lines stock will likely remain highly sensitive to the dynamics of the oil market. In the longer term, traders will pay attention to the dynamics of earnings estimates. If earnings estimates stabilize and start to move higher, the stock will get additional support.

For a look at all of today’s economic events, check out our economic calendar.