Delta to Fly High with Starlink Internet Services

Amid rising preference for wireless internet services on airplanes, per a Wall Street Journal report, Delta Air Lines (NYSE: DAL) conducted exploratory tests of Starlink’s technology as disclosed by Delta CEO Ed Bastian in a recent interview. Starlink is SpaceX’s broadband unit. 

Initially, Mr. Bastian has not been in support of paid internet services on many planes. Wishing to shift from this traditional model, the airline performed a test run of the free internet on some flights before the pandemic broke out.

No comments were released by SpaceX, Tesla (TSLA) CEO Elon Musk’s satellite-internet business. 

Delta has already implemented satellite-internet connectivity on its aircraft. By March, the company had over 300 aircraft Viasat powered WiFi. Viasat is a satellite-communication company, which connects thousands of planes. 

Background 

For years, SpaceX, a manufacturer of the world’s most advanced rockets and spacecraft, was working on Starlink. It had sent “internet satellites into the lower reaches of orbit” and sold broadband services to both enterprises and individuals. 

According to Jonathan Hofeller, VP of commercial sales at Starlink, the unit had “250,000 subscribers, including consumers and enterprise clients.” While this is an impressive number, SpaceX and Starlink have a ways to go before reaching the predicted 40 million subscribers by 2025. 

Wall Street’s Take 

Recently, UBS analyst Myles Walton upgraded Delta Airlines to a Buy from a Hold and increased his price target to $53 (25.8% upside potential) from $44. 

Walton commented, “While other carriers are struggling with aircraft delivery timing or capacity restoration, Delta appears to be more proceeding-to-plan, which we think has led to better cost containment and better pricing power from consumer preference.” 

Consensus among analysts is a Strong Buy based on 13 Buys versus three Holds. The average Delta price target of $49.92 implies 18.49% upside potential from current levels. Shares have gained 4.57% year to date. 

Investor Wisdom  

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Delta Airlines, with 2.6% of investors maintaining portfolios on TipRanks increasing their exposure to DAL stock over the past 30 days. Furthermore, 1.1% of these individuals have increased their holdings in the recent week. 

Bottom-Line 

With upbeat fourth-quarter results, high analyst ratings, revival in the airline industry, recent price movements, along with premium services offered for corporates to combat competitive pressure, investors might consider investing in this stock for long-term gains.

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