While many market sectors are being troubled by macroeconomic uncertainty, the travel sector may very well have it the worst. Given the rise in inflationary pressures and recession risks, it could be difficult to justify travel expenditures at the moment.
Keeping this in mind, many advisors and experts were keen to hear what Delta Air Lines had to say during its earnings report today. Earlier in March, Delta had cut its first quarter earnings outlook due in part to lower travel demand.
However, Delta’s first quarter earnings showcased some relatively good results. Revenue matched analyst expectations, while earnings per share actually outperformed. In total, net income for Delta’s first quarter jumped to $240 million.
Later this year is where Delta is expecting headwinds to grow. The company has pulled its 2025 financial forecast, while projecting second-quarter revenue to land below expectations.
“With broad economic uncertainty around global trade, growth has largely stalled,” said Ed Bastian, Delta CEO. “In this slower-growth environment, we are protecting margins and cash flow by focusing on what we can control. This includes reducing planned capacity growth in the second half of the year to flat over last year while actively managing costs and capital expenditures.”
Some investors may see Delta’s muted 2025 expectations as a reason to sell off their exposure to their company. However, this could easily not be the case.
Taking a pragmatic approach to growth this year could work out in Delta’s favor, especially if we see economic uncertainty moderate. Additionally, lower oil prices could translate into less costly flight expenses on Delta’s side.
Stick With Delta Using Active ETFs
For those deciding to ride it out with Delta, an actively managed ETF could very well be the way to go. Active ETFs, especially those focused on value, could help investors weather market volatility while still planning for the future.
Notably, the Cambiar Aggressive Value ETF (CAMX ) allocates a notable amount of its assets towards Delta stock. CAMX is an active ETF from Cambiar Investors that focuses on building capital appreciation through a value-focused portfolio.
Utilizing a “best ideas” mindset, CAMX’s portfolio team selects companies that can provide significant risk/reward prospects. This includes domestic and international companies of any cap range. CAMX’s focus on value can help provide broad sector exposure in a moment where diversification is more important than ever.
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