3 Airline Stocks to Avoid as Covid-19 Cases Surge in Europe

NYSE: DAL | Delta Air Lines, Inc.  News, Ratings, and Charts

DAL – Even with general progress being made worldwide regarding stemming the COVID-19 pandemic through mass vaccinations, Europe is again witnessing a surge in COVID-19 cases. With many European countries announcing new restrictions, we think it could be wise to avoid fundamentally weak airline stocks Delta Air Lines (DAL), United Airlines (UAL), and American Airlines (AAL). Read on.

While countries worldwide are trying to return to normalcy, the latest news reports from various parts of Europe point to a sharp surge in COVID-19 cases. Germany reported its highest number of infections in a single day since the start of the pandemic. Similarly, Austria and the Netherlands have implemented partial lockdowns to prevent the virus’ spread.

Virgin Galactic Holdings, Inc.’s (SPCE) Richard Branson once famously said, “If you want to be a millionaire, start with a billion dollars and launch a new airline.” Airlines as a business venture are often highly risky due to the industry’s uncertainty. The airline industry was already facing headwinds before the pandemic. And even with the elimination of some restrictions, widespread anxiety due to the healthcare crisis remains.

With the COVID-19 situation deteriorating in Europe, the airline industry is again expected to receive a blow as rising infection rates and restrictions reduce travel demand. Amid this scenario, we think it could be wise to avoid airline stocks Delta Air Lines, Inc. (DAL), United Airlines Holdings, Inc. (UAL), and American Airlines Group Inc. (AAL).

Delta Air Lines, Inc. (DAL)

DAL, in Atlanta, Ga., provides air transportation for passengers and cargo internationally. It operates in the airline and refinery segments. While the airline segment provides passenger air transportation and cargo facilities, its refinery segment provides jet fuel to its airline segment through production or tie-ups with third parties.

For its fiscal third quarter, ended September 30, 2021, DAL’s operating revenue was $9.15 billion compared to $12.56 billion for its fiscal third quarter, ended September 30, 2019. The company’s adjusted net income was $194 million, versus $1.50 billion for the third quarter ended September 30, 2019. Also, its FCF was a negative $463 million compared to $1.42 billion for the same period.

Analysts expect DAL’s EPS to remain negative for the quarter ending December 31, 2021, and in its fiscal year 2021. Furthermore, its EPS is expected to decline at a 23.7% rate  per annum over the next five years. Over the past six months, the stock has lost 14% in price to close Friday’s trading session at $39.69.

DAL’s weak fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree. 

It has a D grade for Momentum and Stability. In the F-rated Airlines industry, it is ranked #10 of 32 stocks. Click here to see DAL’s ratings for Growth, Value, Quality, and Sentiment as well.

United Airlines Holdings, Inc. (UAL)

UAL is the Chicago-based holding company of United Airlines, Inc. It operates in the passenger and cargo transportation segments throughout North America, Asia, Europe, the Middle East, and Latin America.

UAL’s operating expenses for its fiscal third quarter, ended September 30, 2021, increased 63.5% year-over-year to $6.71 billion. The company’s long-term debt rose 26.9% sequentially to $31.52 billion. Also, its total operating revenue came in at $7.75 billion, down 31.9% compared to the third quarter ended September 30, 2019.

UAL’s EPS for the quarter ending December 31, 2021, and in its fiscal year 2021 is expected to remain negative. Also, its EPS is expected to decline at a 129.1% rate per annum over the next five years. The stock has lost 17.3% in price over the past six months to close Friday’s trading session at $46.11.

UAL’s POWR Ratings reflect this weak outlook. It has an F grade for Stability, and a D grade for Momentum and Sentiment. It is ranked #20 in the Airlines industry. To check the additional ratings of UAL for Growth, Value, and Quality, click here.

American Airlines Group Inc. (AAL)

With its regional airline subsidiaries and third-party regional carriers, Fort Worth, Tex.-based AAL provides air transportation for passengers and cargo. Its subsidiaries include American Airlines (American), Envoy Aviation (Envoy), PSA Airlines (PSA), and Piedmont Airlines (Piedmont).

AAL’s revenues for its fiscal third quarter, ended September 30, 2021, was $8.97 billion versus $11.21 billion for the third quarter, ended September 30, 2019. The company’s operating expenses increased 38.5% year-over-year to $8.37 billion, while its non-operating expenses increased 73.8% year-over-year to $389 million.

Analysts expect AAL’s EPS to remain negative for the quarter ending December 31, 2021, and in its fiscal year 2021. Furthermore, its EPS is expected to decline at a 105.1% rate per annum over the next five years. Over the past six months, the stock has lost 16% in price to close Friday’s trading session at $19.28.

AAL’s weak fundamentals are reflected in its POWR Ratings. It has an F grade for Sentiment, and a D grade for Momentum and Stability. It is ranked #13 in the Airlines industry. Click here to check the additional ratings of AAL for Growth, Value, and Quality.

AAL is one of the stocks currently in the POWR Charts trading alert service based upon Christian Tharp’s 5 WINNING Stock Chart Patterns. Click here to learn more.


DAL shares were trading at $40.00 per share on Monday morning, up $0.31 (+0.78%). Year-to-date, DAL has declined -0.52%, versus a 27.86% rise in the benchmark S&P 500 index during the same period.


About the Author: Dipanjan Banchur


Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
DALGet RatingGet RatingGet Rating
UALGet RatingGet RatingGet Rating
AALGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

7 Simple Strategies to Beat the Market

Steve Reitmeister has been investing successfully for over 40 years. In his new presentation he shares his top 7 strategies learned over the years to help investors beat the stock market (SPY). Discover these strategies now to improve your investing results in the months and years to come.

:  |  News, Ratings, and Charts

AutoNation: A Great Value Stock

Shortages in parts, especially semiconductors, this year, has been a boon to auto dealerships. Consumers resorted to buying used cars and parts, which benefits a company such as AutoNation, Inc. (AN). The stock has seen strong revenue growth and share gains this year. Since AN is still very much undervalued, there is a lot more upside left for investors.

:  |  News, Ratings, and Charts

Go From Zero to 60 with a Still-Early-Stage Stake in Fisker

Admittedly, it took a long time for Fisker (FSR) to unveil its all-electric SUV. With that event now completed, FSR stock is prepped for a rally.

:  |  News, Ratings, and Charts

Bull Market Update: Year End Targets?

4,700 seems to be a point of serious resistance for the S&P (SPY) leading to an extended consolidation period hand in hand with violent sector rotation. Why is this happening? What happens next? And how to trade this environment? The answer to these questions and more are discussed in this market commentary below...

:  |  News, Ratings, and Charts

Go From Zero to 60 with a Still-Early-Stage Stake in Fisker

Admittedly, it took a long time for Fisker (FSR) to unveil its all-electric SUV. With that event now completed, FSR stock is prepped for a rally.

Read More Stories

More Delta Air Lines, Inc. (DAL) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All DAL News