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Delta Air, American, United Rise as U.S. Readmits Foreign Travelers

Among those who had been barred from the U.S. for up to 21 months were people from China, Canada, Mexico, India, Brazil and much of Europe.
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Most major U.S. airline stocks rose Monday as the U.S. began allowing fully vaccinated foreign travelers to visit again, after keeping many of them out for up to 21 months.

Among those who had been barred from visiting were people from China, Canada, Mexico, India, Brazil and much of Europe.

American Airlines  (AAL) - Get American Airlines Group, Inc. Report Monday closed at $22.25, up 2%; Delta Air Lines  (DAL) - Get Delta Air Lines, Inc. Report at $44.65, up 0.8%; and United Airlines  (UAL) - Get United Airlines Holdings, Inc. Report at $53.11, up 0.8%. 

To be sure, Southwest Airlines  (LUV) - Get Southwest Airlines Co. Report closed down 1.7% to $51.37, and JetBlue Airways  (JBLU) - Get JetBlue Airways Corporation Report eased 1.2% to $15.93.

Morningstar analyst Burkett Huey puts fair value for Delta Air at $54.50, though he gives it no moat.

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“We think Delta is the highest-quality legacy carrier, because it has been able to attract high-yielding business travelers through its product segmentation and credit card partnerships, primarily with American Express,”  (AXP) - Get American Express Company Report he wrote last month.

“Delta’s five-cabin segmentation strategy allows high-spending travelers to purchase premium options when they are able to. Frequently, business travelers use miles from a cobranded credit card to upgrade flights when their company is unwilling to pay a premium price.

“American Express pays top dollar for the miles given to these business travelers, as Delta-cobranded cards alone account for about a fifth of American Express’ loan book. 

"We’re confident that Delta can continue expanding this higher-margin business after the pandemic.”

Delta shares have gained 12.3% year to date, trailing the S&P 500, which registered a 25% gain over that period. But over the past 12 months, Delta climbed 44%, beating the S&P 500 by 10 percentage points.