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Delta Airlines

Company Analysis Paper

MGMT 475

Luke Moen
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I. Industry Description

Delta Airlines is the U.S. global airline leader in safety, innovation, reliability, and

customer service. Powered by their employees around the world, Delta has led the airline

industry in operational excellence while maintaining their reputation for award-winning

customer service (Travel Planning Center). Delta Airlines was founded in 1925 in Macon,

Georgia.

Delta Airlines is part of the airline industry. The airline industry is a huge industry today

in both the United States and across the world. The airline industry today helps drive $1.7 trillion

in U.S. economic activity and more than 10 million jobs in the United States alone (The Airline

Industry). Commercial air travel is one of the fastest forms of intercity transportation in the

United States. Safety is the airlines industry number one priority and in order to keeps everyone

safe all of the different airlines work together with the Department of Transportation, Federal

Aviation Administration, National Transportation Safety Board, Department of Homeland

Security, Transportation Security Administration, Customs and Border Protection, aircraft

manufacturers, labor, and others to provide a safe and efficient travel experience (The Airline

Industry). By working together with those government agencies, airlines are able to develop and

implement tools and procedures to ensure they always maintain the highest level of safety for

their customers, employees, and aircrafts. Most United States airlines are doing a lot in order to

enhance the passenger experience for their customers. United States airlines invested more than

$120 billion in 2010-2018 to enhance their products and services by purchasing new

fuel-efficient aircraft, adding state-of-the-art seats and interiors, developing modern airport

terminals and customer lounges and expanding in-flight entertainment, mobile technology, Wifi

and gourmet meal offerings (The Airline Industry). The airline industry isn’t only in the United
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States, it is a global industry. The airline industry operated in 80 different countries with more

than 800 destinations (The Airline Industry).

II. Industry Forces and Trends

The years 2020 and 2021 have been a wild year for everyone and every industry. The

year 2020 was full of many unique challenges and conditions, but the most obvious influences

driving both business and consumer behavior the past year in the United States include the

COVID-19 global pandemic, racial injustice awakening, rising unemployment rates, and

expected future recession. The COVID-19 pandemic has greatly impacted the airline industry. In

total, United States passenger airlines incurred more than $40 billion in pre-tax losses in the year

2020 (Impact of COVID-19: Data Updates). A lot of people that normally would fly opted not to

because of the pandemic. That goes to show that COVID-19 affected all of the airlines and not

just delta. For example, in the June quarter of 2020 Delta’s operating revenue was $1.2 billion

which was down 91% versus the June 2019 quarter (Impact of COVID-19: Data Updates).

COVID-19 negatively affected the passenger airlines, but the cargo airlines were unaffected by

the pandemic. The air cargo demand reached an all time high in 2020 and it continues to rise in

2021.

The COVID-19 pandemic was truly a once in a lifetime event and it is important to look

at Delta and the airline industry prior to the global pandemic because of how much the pandemic

affected airlines. The year before covid-19 happened was the best year of all time for Delta

Airlines. In 2019, Delta passed all of its competitors to become the world’s largest airline. Delta

is clearly a leader in the airline industry. Delta’s success in 2019 was all the more notable

because they avoided headwinds that sent competitors scrambling, such as the 737 Max fiasco,
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contentious labor issues, and uncontrollable factors like bad weather in hub cities (Slotnick,

2020). Delta was able to avoid all of those things while all of their major competitors were not.

That really helped Delta to stand out in the airline industry. Another thing that makes Delta a

leader in the airline industry is their premium cabin seats, products, and upsells. Those have all

been a major source of revenue for Delta, as corporate customers and leisure passengers continue

to be willing to pay more for a better on-board experience (Slotnick, 2020).

Delta was named the overall best US airline by The Wall Street Journal based on a

variety of objective performance metrics, including on-time arrivals, cancelled flights, delays,

lost luggage, and involuntary bumps (Slotnick, 2020). Delta was also named the most on-time

North American airline by FlightGlobal. The CEO of Delta, Ed Bastian, had this to say about his

company, “Exceptional operational performance, along with unmatched customer service is why

more people than ever are choosing to fly Delta.” Delta does a lot of things very well, but one

thing that their competitors do better is offer a better loyalty program. Some Delta users have

complained that their program is less lucrative for users compared to some of Delta's

competitors.

III. Company Partners and Complements

Delta Airlines has several different partners and partnerships. One partnership that Delta

has is with Lyft. This is a good partnership because people tend to need a ride to and from the

airport quite a bit. Delta and Lyft’s partnership is where one can link their SkyMiles account to

their Lyft account and earn miles on their Lyft rides. Lyft users are able to earn one mile for

every dollar spent on the ride. If it is a ride to or from the airport, Lyft users are able to earn two

miles for each dollar spent on the ride (Delta and Lyft partnership). Along with Lyft, Delta also
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has similar partnerships with rental car companies such as Hertz, Alamo, and Enterprise. Delta

also has a partnership with Airbnb and some hotels such as Radisson, World of Hyatt, and

Marriott Bonvoy. All of the partnerships with the hotels and Airbnb are similar. Most of them are

where you can earn one mile for every dollar spent on your stay. Some of them offer more than

one mile but they are all still pretty similar. Another partnership that Delta has is with

Ticketmaster. The partnership is where you get one mile for every dollar spent on eligible ticket

purchases. All of those partnerships have to do with earning miles for SkyMiles accounts.

Along with partnering with hotels, car companies and others, Delta also has several

partnerships with different airlines. All of the airlines that they have partnerships with are global

airlines. Some examples of the different airlines that Delta has a partnership with include

AeroMexico, AirFrance, Korean Air, and Virgin Atlantic (Travel Planning Center). All of their

global partners are the same with offering medallion benefits. Some of the medallion benefits

include lounge access, priority boarding, complimentary upgrades, and extra baggage allowance

(Travel Planning Center). In order for one to get all of those benefits, they must be a medallion

member. In order to become a Delta medallion member you must be one of their loyal customers.

With medallion status, you have opportunities to fly more comfortably, move to the front of the

line, enjoy waived fees, and other elite benefits that only Delta offers (Travel Planning Center).

Delta has several partnerships with different airlines, but they obviously don’t have any

partnerships with their major competitors. Delta’s major competitors include United Airlines,

American Airlines, and Southwest Airlines.

IV. Major Competitors and Strategy Differentiation

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There are several smaller airlines that focus on cheap prices such as Allegiant, Frontier,

and Spirit. Those airlines' strategies are different from Delta’s, so they are not necessarily

competitors. The major competitors for Delta include United Airlines, American Airlines, and

Southwest Airlines. Those are Delta’s major competitors because they all have the same target

audience for the most part. Delta’s target audience is the upper middle class, high net worth

individuals, and frequent business travelers. United Airlines' target audience is the same as

Delta’s, and they are both known as premium airlines offering high-quality service (Neugarten,

2021). American Airlines also targets the same group as Delta. Southwest Airlines target market

is slightly different from Delta’s target market. Southwest’s target market consists of

middle-class fliers as opposed to luxury or business class travelers, but they are still a huge

airline firm and that is why they are a competitor to Delta.

Delta’s strategy is centered around their core values: taking care of their people and their

customers. Delta has an unmatched competitive advantage due to their culture, operational

reliability, global network, and customer loyalty (Leading the way: Delta highlights). Delta’s

strategy evolves around those things. Delta’s culture is unmatched compared to their competitors.

The story about Delta’s unmatched culture is described as “The Delta family and our culture is

committed to supporting the communities where we live, work and serve. A spirit of service is

the foundation of everything we do, whether it’s taking care of our customers, our colleagues or

our communities” (Leading the way: Delta highlights). Delta is also very focused on their

operational reliability. Delta is continuously focusing on further improving its industry-leading

operational reliability, they are investing in new tools and technology to further eliminate

maintenance cancellations and enhance the customer experience (Leading the way: Delta

highlights).
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V. Industry Evolution Near and Far

Competition in the airline industry is likely to change in the immediate and long term

future mostly because of complications from the pandemic. I believe that there will be some

major changes in the next five years for the airline industry. The first thing that is likely to

happen is that firms will start cutting out all of their first class options. First class is already

becoming a rare beast, with numerous airlines removing the cabin in favor of larger and better

business class options (Bailey et al., 2020). Instead of first class options, I believe that there will

be other options such as business plus, premium classic, and economy extra. Removing first

class options gives airlines the option to have more division between all of the other classes.

Another way that the industry is likely to evolve in the next five years is biometrics will

become huge. Biometrics are body measurements and calculations related to human

characteristics (Bailey et al., 2020). Biometrics authentication is used in computer science as a

form of identification and access control and it is also used to identify individuals in groups that

are under surveillance (Bailey et al., 2020). We have already seen how biometrics are changing

the airport experience, with the use of biometric boarding expanding at a rapid pace (Bailey et

al., 2020). I believe that biometrics will expand even further in the next five years and biometrics

has the potential to smooth out and expedite the whole travel experience. The ideal situation

would be passengers being able to board their plane without any kind of boarding pass using

only their face as ID.

One competitive move that Delta’s competitors might make in the future is to try to

imitate Delta’s strategy because of how successful Delta is. Delta takes pride in excellent

customer service and making their customers happy, and I think that their competitors will try to

imitate that in the future if they want to keep up with Delta.

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Another competitive move that competitors might make is to offer more amenities on

their flights than Delta offers. Some examples of amenities that they might include are free

internet, streaming services such at Netflix and Hulu, more food and drink options than what

they already offer, heated and air conditioned seats, and smart lighting. All of those different

amenities are opportunities for Delta’s competitors to gain a competitive advantage over Delta.

VI. Firm Strengths, weaknesses, and resource availability

Delta Airlines has many strengths that have allowed them to grow into a very well known

firm in the airline industry, including but not limited to the following:

● One of the largest players in the global and the United States airline industry (Corporate

Stats and Facts)

● Industry leading fleet of about 871 operating aircrafts (Corporate Stats and Facts)

● The world’s most-awarded airline, Delta has been recognized as a Fortune’s top 50 most

admired company in addition to being named the most admired airline 8 out of the last 9

years.

● Ranked number one in the Business Travel News Annual Airline survey for an

unprecedented 10 consecutive years (Corporate Stats and Facts)

● One of the top workplaces for women and members of the military (Corporate Stats and

Facts).

● Has built a strong brand image based on operational reliability as well as customer

service (Corporate Stats and Facts).

● Delta transports passengers and cargo around the world. Its large route covers more than

300 destinations across 50 countries (Corporate Stats and Facts).

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● The level of customer engagement of Delta Airlines is high and this helps them gain

repeat business from current customers (Corporate Stats and Facts).

● They have multiple hubs in Atlanta, Seattle, and New York (Corporate Stats and Facts).

Delta has several strengths, but they also have some weaknesses including but not limited to the

following:

● High attrition rate in the workforce- compared to other organizations in the industry Delta

Airlines has a higher attrition rate and have to spend a lot more compared to its

competitors on training and development of its employees (Department).

● Financial planning is not done properly and efficiently. The current asset ratio and liquid

asset asset ratios suggest that the company can use the cash more efficiently than what it

is doing as present (Department).

● Poor marketing of some of their products.

● Huge revenue loss in 2020 and 2021 due to the coronavirus.

VII. Financial Analysis

The years 2020 and 2021 have been very difficult for every airline company due to the

global pandemic. There were huge differences in the financial statements between 2019 and

2020 as you can see in the following table.

Performance Fiscal Year 2019 Fiscal Year 2020 Difference

Indicator

Total Revenue 47,007,000 17,095,000 29,912,000

(thousands)
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Gross Profit 10,382,000 -6,451,000 16,833,000

(thousands)

Pretax Income 6,198,000 -15,587,000 21,785,000

(thousands)

EBIT 6,499,000 -14,658,000 21,157,000

(thousands)

Operating Income 6,618,000 -4,250,000 10,868,000

(thousands)

(2021)

As shown, the past year has been very challenging for Delta. Delta has lost millions of dollars

due to the global pandemic going on. The only good news for Delta is that the pandemic will

eventually end and things will hopefully return to normal in the near future.

VIII. Strategic Alternatives with strengths and weaknesses

The first strategic alternative that I would recommend for Delta Airlines is to purchase

some kind of cryptocurrency that would allow customers to purchase their tickets with

cryptocurrency. A cryptocurrency is a digital or virtual currency that is secured by cryptography,

which makes it nearly impossible to counterfeit or double-spend (Frankenfield, 2021).

Cryptocurrency is becoming more and more popular and I think that if Delta were to purchase

some it would help them stand out from their competition. Delta would also get some new

customers that they never had before by people being able to purchase tickets with

cryptocurrency. With Delta’s current strategy, they prioritize taking care of their customer and

with this alternative it would give their customer more options on how to pay for their airline
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tickets. Delta would keep their existing customers and even gain new customers with this

alternative. The price of cryptocurrency tends to fluctuate so Delta might even make extra money

from this alternative. Buying cryptocurrency may seem like a great idea for Delta, but there

would be some challenges in implementing this alternative. The first challenge would be that

cryptocurrency is difficult to understand if one is not familiar with it. I think it is safe to say that

most people don’t know much about cryptocurrency because of how new it is. Without

understanding all of the details of cryptocurrency, it may be unsafe for people to deal with it.

Another challenge that Delta might face is that cryptocurrency is volatile. The market can be

very unpredictable and it could be risky to invest without understanding all of the risks.

The second strategic alternative that I would recommend for Delta Airlines is to take

advantage of the surplus of aircrafts right now. In the years before COVID-19 happened, aircraft

OEMs ramped up production in the anticipation of continued growth of the airline industry. This

has led to a glut in aircraft availability (Bouwer et al., 2021). Some firms such as Norweigian Air

Shuttle have exited the market and returned relatively new aircrafts to lessors. Prices for

used-aircraft leases have plummeted and are likely to remain lower. The global pandemic is not

going to last forever as many adults are already vaccinated or partly vaccinated so I think Delta

should capitalize on this opportunity. For example, the monthly lease of a 2016 vintage Boeing

777-300ER aircraft was around $1.2 million in 2019. In 2020, the rate fell to less than $800,000

(Bouwer et al., 2021). As lease rates and OEM pricing fluctuate with supply and demand levels,

inking deals during a crisis could allow carriers to enjoy a cost advantage for years to come

(Bouwer et al., 2021). The big advantage to this alternative is Delta getting huge discounts and

saving a lot of money while gaining more aircrafts for when the pandemic ends in the near

future. I believe that people who have never flown with Delta before will fly with them after the
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pandemic because they are tired of quarantine and want to experience the world. One challenge

or disadvantage to this alternative is that no one knows when the pandemic is going to end or if

everything will go back to normal if it ends. Leasing more aircrafts would definitely be a risk for

Delta, but I think it would pay off in the long run.

The third strategic alternative that I would recommend for Delta Airlines is to focus on

acquiring a partnership with a professional sports league such as the NBA, MLB, NHL, and the

NFL. This partnership would consist of Delta supplying the aircrafts for all of the teams in the

league that they choose and Delta would be the official flyer for that league. Most of the

professional sports teams today have a private jet for their travel, but this partnership would

benefit both Delta and the sports league. The big advantage for this alternative is that Delta’s

name would be seen by many people. Delta seems to like to have partnerships with other firms

so I think that this partnership would go right with their strategy. The biggest disadvantage of

this alternative would be how expensive it would be for Delta up front because they would be

supplying aircrafts for the teams.

IX. Alternative Specific Recommendation

I believe that the best recommendation that I made was my second one. That one was

Delta taking advantage of the surplus of airplanes right now due to the pandemic. I talked a lot

about COVID-19 and the pandemic in my analysis and that is why I think this would be the

perfect alternative. I know Delta is currently losing a lot of money, but as lease rates fluctuate

with supply and demand levels, inking deals during a crisis could allow Delta to enjoy a cost

advantage for years to come because the pandemic is nearing the end. Right now would be the

perfect time for Delta to implement this alternative.

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Work Cited

Bailey, byJ., Bailey, J., Joanna Bailey Managing Editor -  Joanna has worked in publishing
for more than a decade and is fast becoming a go-to source for commercial aviation
analysis. Providing commentary for outlets including the BBC, & Articles:, R.
(2020, January 3). 10 Aviation Predictions For The Next Decade: What Will Happen By
2030? Simple Flying. https://simpleflying.com/aviation-predictions-2030/.

Bouwer, J., Saxon, S., & Wittkamp, N. (2021, April 20). Back to the future? Airline sector poised
for change post-COVID-19. McKinsey & Company.
https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/back
-to-the-future-airline-sector-poised-for-change-post-covid-19.

Corporate Stats and Facts. Delta News Hub. (n.d.).

https://news.delta.com/corporate-stats-and-facts.

Delta and Lyft partnership. Lyft Help. (n.d.).

https://help.lyft.com/hc/e/articles/115012927287-Delta-and-Lyft-partnership.

Department, S. M. (n.d.). Delta Air Lines SWOT Analysis Matrix (Strengths, Weakness,
Opportunities, Threats). Fern Fort University.
http://fernfortuniversity.com/term-papers/swot/1433/68-delta-air-lines.php.
Bailey, byJ., Bailey, J., Joanna Bailey

Frankenfield, J. (2021, March 8). Cryptocurrency. Investopedia.

https://www.investopedia.com/terms/c/cryptocurrency.asp.

Impact of COVID-19: Data Updates. Airlines For America. (n.d.).

https://www.airlines.org/dataset/impact-of-covid19-data-updates/#.

Leading the way: Delta highlights its powerful brand, competitive advantages and future
opportunities at annual Investor Day. Delta News Hub. (n.d.).
https://news.delta.com/leading-way-delta-highlights-its-powerful-brand-competitive-adva
ntages-and-future-opportunities.

Neugarten, J. (2021, April 8). Who Are Delta Air Lines' Main Competitors? (DAL).
Investopedia.
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https://www.investopedia.com/articles/markets/093015/who-are-delta-airlines-main-com
petitors.asp.

Slotnick, D. (2020, January 19). Here's what Delta's incredible year reveals about the US airline
industry. Business Insider.
https://www.businessinsider.com/delta-2019-performance-insights-us-airlines-2020-1.

The Airline Industry. Airlines For America. (n.d.).

https://www.airlines.org/industry/#communities.

Travel Planning Center. Delta Air Lines. (n.d.).

https://www.delta.com/us/en/about-delta/overview.

Travel Planning Center. Delta Sky Team Partners : Delta Air Lines. (n.d.).
https://www.delta.com/us/en/skymiles/medallion-program/international-partner-skyteam-
benefits#:~:text=Our%20SkyTeam%20partner%20airlines%20include,Korean%20Air%2
C%20Middle%20East%20Airlines.

Yahoo! (2021, April 30). Delta Air Lines, Inc. (DAL) Income Statement. Yahoo! Finance.
https://finance.yahoo.com/quote/DAL/financials/.
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