Delta plans to compete in its industry by leveraging its strong financial management, an efficient management of cost, as well as an innovative approach to customer service. Delta’s common stock total cumulative returns have been outperforming the S&P 500 and the ARCA airline index over the past six years. Moreover, Delta increased their dividends yield by 50% in the second quarter of 2016 (from $0.135 to $0.2025 per share), Delta’s healthy common stock performance has increased investors’ confidence (Delta’s 10-k, 2016). Another strong financial virtue of Delta is its strengthened balance sheet. Since 2009, Delta’s debt has reduced their adjusted net debt by $11 billion, which has improved Delta’s credit ratings and reduced Delta’s annual …show more content…
The airline industry, a major consumer of oil, is financially affected by crude oil’s price fluctuations. The cost of an airline’s service is partially comprised of the amount of oil consumed, thus a fluctuation in oil’s price will result in an increase or decrease of the bottom line. Because consumers purchase flight tickets well ahead of time, those fluctuations cannot be trickled down to the consumer, and therefore the airline itself will gain or lose based on the fluctuation (Delta’s 10-K, 2016). The aviation industry, and Delta particularly, must also be aware of several threats that could negatively affect the entire industry’s performance. Governmental regulations are a major influencer on the aviation industry. The airline industry could be affected by laws and regulations such as environmental laws, aviation regulations, and taxes. Those laws and regulations pose a threat for the airline industry, because the company’s operational costs would be increased by such governmental acts (Delta’s 10-K, 2016). Weather and natural disasters are also a danger to Delta and the airline industry. Severe weather conditions or natural disasters could disrupt Delta’s service and create air traffic control problems. Flights delays or cancellations, injuries result from turbulences while flying, and increased consumption of fuel are just some of the reasons weather conditions could negatively affect Delta. Under those conditions, Delta could expect reduced revenues and increased costs (Delta’s 10-K, 2016). Terrorism, geopolitical conflicts, and security events are, sadly, a real viable menace nowadays. Terrorism could substantially affect Delta’s business and the airline industry’s in general. 9/11/01 and the aftermath of those attacks has caused the entire airline industry to suffer from heightened costs and reduced revenues(Delta’s10-k, 2016). Geopolitical conflicts are also a