How good is 2014 going to be for DAL stock? I think REALLY GOOD!

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price of oil

Have you seen the price at the pump the past few months? Many are “enjoying” under $3/gallon right now. For many of us, who drive a bunch, the difference between sub-$3 vs. Over-$4 can make a big difference in the monthly budget.

So what am I going on about today? I will get to that but first let me say, as I always do, I do not hold any DAL that is Delta Air Lines stock nor do I plan to buy any in the foreseeable future – I am just not brave enough to buy ANY airline stock.

Many may have missed a HUGE news announcement with the last earnings report from Delta. Did anyone notice that the Trainer oil facility made money for the first time under Delta’s ownership? You should take the time to read this piece about the facility.

http://www.youtube.com/watch?v=85fcZ3nBNNI

Delta spends an amazing amount of money on gas (AKA jet fuel). They are doing everything they can to lighten the load to burn less gas like changing those very heavy 38 pound flight bags to Microsoft Surface 2 tablets for pilots.

intro to sky mag oct 2013 from richard anderson

One of the big reasons, as we see from SKY Magazine,  Delta is DUMPING hundreds of the horrid CRJ100/200’s, that I blogged about in Jan 2012 would happen, is because they are so bad at fuel consumption (or they would not be removing them from service)! Sure it will be a big perk for us to have 1st class seats but if these torture jets could make the airline money they would be sure to keep flying them.

But back to oil. I have spoken to a trusted source who knows the oil biz and he has told me a bunch of interesting info. The bottom line of all of this is Trainer is going to make much more money going forward due to many factors:

1) Crack spread i.e. in laymans terms more gas and jet fuel due to better crude oil to start with from domestic sources

2) Lower gas prices can help Delta vs. most other refiners

3) Lower cost for jet fuel always helps Delta Air Lines bottom line!

Clearly you can see the possible impact on DAL stock and the airline. Again, please know I am not saying you should buy the stock but I would not be shocked if one day the stock flys past what the pundits think.

Either way, a profitable Delta Air Lines can only help us flyers to enjoy a better flying experience and I am all for that! – René

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2 comments

  1. Well that’s nice, but do you really think DAL is going to pass any of this profit along to the customers or employees? I certainly hope it will, but I’m not holding my breath.

  2. I don’t think there is much more profit to be had at Delta, so while I don’t expect their stock do drop, I don’t think it will have explosive growth. If United can deliver on half the savings they say they can, UAL will continue to rise faster than it really should.

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