• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Government Shutdown Could Continue to Cut Into Delta Air Lines' Outlook

Delta's down forecast could be cut deeper as the shutdown disproportionately impacts the airline industry,.
By KEVIN CURRAN Jan 15, 2019 | 10:22 AM EST
Stocks quotes in this article: DAL, JPM, UAL, AAL, BA

Delta Air Lines' (DAL) turbulent takeoff in 2019 could be tempered further by a government shutdown shocking the airline industry.

With some 800,000 government employees furloughed or working without pay, the government shutdown is far reaching, as the entire economy could be stung by the continued battle over border security on Capitol Hill.

"Someone estimated that if [the shutdown] goes on for the whole quarter, it can reduce growth to zero," JPMorgan Chase  (JPM) CEO Jamie Dimon told reporters on a media call on Tuesday morning. "We just have to deal with that. It's more of a political issue than anything else."

The impact appears to be even more pinpointed on the airline industry, which depends on both frequent flyers from federal agencies and services from the federally funded TSA.

"Our March quarter adjusted unit revenue growth is expected to be flat to up two percent including impacts from the timing of Easter, increasing currency headwinds, and the ongoing government shutdown," Delta commented in its earnings release.

Shares of Delta fell in premarket trading Tuesday, before rebounding, as the tempered forecast has reined in analyst price targets and the perception of persistent pain through the first quarter.

"We need to get the business moving again, one of the issues for us is that we're seeing a reduction in revenues in the month of January," CEO Ed Bastian told CNBC on Tuesday morning. "About $25 million per month [is lost] due to the fact that some government contractors and officials are not traveling the way they would've anticipated. We're also having some certification delays in getting new aircrafts brought onto our operating certificate as the FAA has shut down some inspector functions."

Essentially, as the FAA remains shut down, new aircraft from manufacturers sich as Boeing (BA)  and Gulfstream Aerospace are not able to be added to the fleets of major airlines like Delta, United Airlines (UAL) , and American Airlines (AAL) .

For example, Reuters reports that American Airlines has accepted the delivery of two new MAX 8 planes from Boeing, but the planes are sitting idle while they await FAA approval for commercial operation. The lack of new planes in rotation could serve to hurt capacity for the industry.

Bastian also acknowledged longer lines for Delta passengers at airports, though he was unsure as to how much this might affect the travel plans of its customers.

This morning, TSA experienced a national rate of 7.6 percent unscheduled absences compared to a 3.2 percent rate one year ago, Monday, January 15, 2018. Most importantly, security standards remain uncompromised at our nation's airports.

— Michael Bilello (@TSA_Bilello) January 14, 2019

Advice to always get to @iah 2 hours before your flight is especially important today. Shortage of TSA workers, unpaid during the US gov't shutdown, is causing this change. Terminal B is solely @united flights. pic.twitter.com/ijCKa4k1NP

— Sylvester Turner (@SylvesterTurner) January 13, 2019

To be sure, the impact of a $25 million loss per month is not overly material for a company that generates nearly $11 billion in revenue per quarter. This is especially true if the shutdown is ended before the quarter closes, as Bastian anticipates.

It is worth noting that stock has rebounded strongly from its depressed premarket level to a positive result on the open as the market shrugs off the impact.

Optimism is further buoyed by a scheduled meeting between President Trump and lawmakers for lunch on Tuesday. The industry will be hopeful that an end will be called to the standoff as it moves toward its one-month anniversary, marking the longest government shutdown in U.S. history.

Management comments on the subject will be highly anticipated as the company kicks off its quarterly earnings call at 10 a.m. on Tuesday.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities.

TAGS: Regulation | Earnings | Investing | Stocks | Transportation | United States | Analyst Actions | Stock of the Day

More from Stocks

Let's Shine a Light on Lucid Motors as It Slides Downhill

Brad Ginesin
Jul 2, 2022 1:00 PM EDT

LCID's market cap has been deflated, so is it now a bargain, or can it slip further?

Stop Wishing, Hoping and Praying and Take Control of Your Investing

James "Rev Shark" DePorre
Jul 2, 2022 10:00 AM EDT

The most powerful thing an investor can do is embrace the idea that they don't know what the future holds.

If You've Got Time, These Three Dividend Aristocrats Should Pay Off

Bob Ciura
Jul 2, 2022 7:30 AM EDT

There high-growth dividend stocks will be here over the long haul.

Welcome to Second Semester on Wall Street, Here's How to Make the Grade

Jim Collins
Jul 1, 2022 4:36 PM EDT

Think you can own big tech? You might just get an 'F' for that. Here's what will get you on the other side of this year.

We Got a Break, but the Heat Is Still On

James "Rev Shark" DePorre
Jul 1, 2022 4:22 PM EDT

A limited rally cooled some of the negativity on the market, but guess what's going to hit the fan soon?

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:49 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Stop Wishing, Hoping, and Praying and Take Control...
  • 07:59 PM EDT PAUL PRICE

    Very Good Quarterly Numbers From Bassett Furniture (BSET)

    Bassett Furniture blew right through analysts es...
  • 04:41 PM EDT PAUL PRICE

    First-Half Results - Putrid; Second Half Results - Likely to Be Much Better

    It's great that we're done with June. 2022 mark...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login