The valuation gap between GE Aerospace and Delta Air Lines suggests the market may be mispricing Delta, which has significantly diversified its revenue beyond cyclical main cabin ticketing. In its most recent quarter, Delta’s premium cabin revenue of $6.92 billion exceeded main cabin revenue of $6.85 billion, while loyalty travel awards contributed $1.25 billion and travel-related services added $589 million, meaning less than 44% of its $15.6 billion in passenger revenue came from the main cabin. Other revenue, which includes a large portion of co-branded credit card remuneration, surged 50% to $3.9 billion. The market traditionally assigns GE Aerospace a premium valuation due to expectations of recurring services revenue from its installed base of aircraft engines, while pricing Delta as a highly cyclical stock, but Delta’s evolving revenue mix challenges that assumption.
Delta Air Lines IncArticle argues Delta is mispriced due to revenue diversification reducing cyclicality, implying upside potential.
United Airlines Holdings Inc
GE Aerospace