Delta Airlines SWOT & PESTLE Analysis

Strength

1. Strong performance with investment grade balance sheet: Delta Air Lines has strengthened its financial performance since 2013, holding on its positive momentum. In FY 2018, it has earned total revenue of US $44,438 million with a net income of US $3,935 million. Further, Delta plans to return $2.5 billion to shareholders through dividends and buybacks in 2019 and has delivered five consecutive annual dividend increases, with dividend yield ~2.8% as of 2019. The company made it once again to the Fortune’s Most Admired Companies list again in 2019 with a flobal rank of 28. Delta was also named Fortune's Most Admired Airline, rated No. 1 on the industry list for the eighth time in the past nine years.

2. Good labor relations and loyalty: Delta Air Lines has good relationship with all of its employees which have contributed to the increased investor interest and operational success. Delta’s around 12000 mainline pilots are represented by the Airline pilots association, International and is the union’s largest pilot group. In 1982 when the airline was going through financial troubles, its employees took a voluntary pay cut and with which delta purchased its first Boeing 767 which was then called “spirit of Delta”. In 2016, the employee satisfaction at Delta was at all-time highs with engagement scores topping 89%.

3. Extra benefits for customers: Delta has many long-term advantages and offering under which it offers Wi-Fi service to in-flight passengers and on-board passengers, Delta on Demand digital entertainment system which provides satellite TV, movies, MP3 songs, games etc. For first class passengers, it offers same features as of economy but more comfy pillows, free cocktails, blankets, etc. Further in recognition of its great experience, Delta One was named “Best Business Class” by Chinese travel media in 2016.

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Weakness

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Opportunity

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Threat

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Political

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Economic

1. Trade protectionism policies – advantage for Delta: Trade protectionism and government subsidies result in changing the industry environment giving advantage to select companies. The major airlines in the Unites States including Delta Air Lines have accused the major gulf based carriers such as Etihad, Qatar Airways of getting unfair subsidies from their respective governments. Implementation of trade protectionism policies under Donald Trump administration will be advantageous for US based aviation players such as Delta Air Lines.

2. Expensive labor contracts may impact future profitability: Many network carriers in the United States including Delta Air Lines have inked new, more expensive labor contracts over the past year. Delta’s new four-year labor contract in 2016 contains major pay raise and also includes profit- sharing formula. Though the airline is delivering strong financial performance over the past few years, these contracts may result in huge payroll costs in the future impacting profit margins.