Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Businessweek Archives

Eastern's Demise Is Delta's Rebirth


Inside Wall Street

EASTERN'S DEMISE IS DELTA'S REBIRTH

The buffeted airline stocks certainly aren't for the faint of heart, particularly now that they have risen to lofty levels again. Shares of Delta Air Lines have jumped from 56 in early January to 71 on Feb. 19. Fierce fare wars and volatile fuel prices--not to mention the slump in travel because of terrorism fears--remain a concern to investors. So you would think the airlines' next turn would be downward.

No way, say pros who are buying Delta as if it had just hit bottom. "Investors--including the big guns--haven't yet recognized the growth potential of Delta, which has just acquired Eastern Air Lines' gates at the Atlanta airport," says Steve Leeb, president of the Money Growth Institute. "Nobody thinks Delta is a $150 stock," he says. "I do." Leeb notes that the acquisition of Eastern's 18 gates and facilities in Atlanta gives Delta control of "the world's second-busiest airport, which is also a port of entry to the U. S."

He sees Delta returning to profitability in 1991, vs. a loss in 1990. The big recovery will come in 1992, he says, with the carrier earning well over $5 a share, and in 1993, when Leeb expects profits of $10. The stock will also explode over the next two to three years, he says. Why? If the industry suffers more bankruptcies and mergers, as Leeb expects, survivors such as Delta will have firmer control of pricing.

The kicker is international flights. Delta already flies between Cincinnati and Paris and between Atlanta and Amsterdam. The carrier also plans to serve Los Angeles-Tokyo, as well as routes to eastern Europe and the Soviet Union. "Those will be lucrative," says Leeb.GENE G. MARCIAL


LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus