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Delta Air Lines (NYSE: DAL) is making significant strides in expanding its global footprint, particularly in the Middle East, through new partnerships with Saudi Arabian airlines. The Atlanta-based carrier recently announced a codeshare agreement with Saudia Airlines and a strategic cooperation with the upcoming Riyadh Air, set to launch in 2025. These moves come as Delta’s stock performance shows strong gains, outpacing the broader market in year-to-date and one-year returns.
Delta-Saudia Codeshare Agreement to Enhance Travel Options Between North America and the Middle East
The new codeshare agreement between Delta and Saudia Airlines, pending government approvals, promises to enhance travel options between North America and the Middle East.
Delta customers will gain access to nine new destinations in Saudi Arabia through Saudia’s hubs in Jeddah and Riyadh. Conversely, Saudia passengers will enjoy connectivity to 12 additional U.S. cities via Delta’s hubs in New York (JFK) and Los Angeles (LAX). Both airlines are members of the SkyTeam alliance, which should facilitate seamless integration of services.Perry Cantarutti, Delta’s Senior Vice President of Alliances, emphasized that the partnership responds to growing customer demand for increased travel options between the Gulf region and North America. Saudia’s Chief Commercial Officer, Arved Von Zur Muehlen, highlighted the agreement’s role in promoting Saudi Arabia as a tourist and business destination, aligning with the country’s Vision 2030 program that aims to attract over 150 million tourists by the end of the decade.
Saudi Arabia’s Aviation and Tourism Push
The codeshare agreement is part of a larger trend of cooperation between Delta and Saudi aviation entities. In July 2024, Delta signed a Strategic Cooperation agreement with Riyadh Air, a new airline set to begin operations in 2025. This partnership aims to offer joint interline and codeshare connectivity, loyalty program integration, and cooperation in digital transformation and sustainability practices.These partnerships coincide with Saudi Arabia’s massive $800 billion investment in tourism, aimed at transforming its economy and attracting more international visitors. The country is developing luxury resorts on the Red Sea, opening historical sites like Diriyah and al-Ula, and preparing to host the 2030 World Expo in Riyadh. These initiatives are expected to significantly boost air travel demand to and from the Kingdom.As of 10:15 AM EDT on the day of reporting, Delta’s stock was trading at $49.14, up 3.54% with a market capitalization of $31.716 billion. The stock has shown strong performance, with a year-to-date return of 23.10% and a one-year return of 40.92%, both outpacing the S&P 500 index.
However, its longer-term performance has lagged, with a five-year return of -4.44% compared to the S&P 500’s 96.46% gain over the same period.Analysts maintain a positive outlook on Delta, with the majority recommending “Buy” or “Strong Buy.” The average price target of $60.41 suggests potential upside from current levels. As Delta prepares to report its Q3 earnings in October, analysts are closely watching for signs of continued recovery in the aviation sector, despite expectations of a potential decline in earnings.
The company’s strategic moves, including its Middle East partnerships and plans to boost its Asian presence through flights to Seoul, are likely to be key topics of interest for investors in the coming months.More By This Author:Nvidia Stock Up Over 150% YTD, CEO Says Demand For New Chip Is “Insane”
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