Delta Air Lines (DAL) is changing how it prices tickets and manages its planes by using artificial intelligence to boost profits and a clever workaround to avoid tariffs. One major update is Delta’s testing of a new AI pricing tool on 3% of its domestic flights. The airline plans to expand this to 20% by the end of the year. The tool, created by Israeli company Fetcherr, tries to predict how much a person is willing to pay for a ticket and adjusts prices in real time. Delta President Glen Hauenstein said that the more the system is used, the better it gets at learning customer behavior and setting prices that improve revenue.
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While still in its testing phase, the AI tool is already showing strong results. Hauenstein compared Fetcherr’s technology to having a nonstop “super analyst” that helps redesign the way Delta prices flights. In the future, Delta hopes to use this system to not only set prices but also control how many seats are sold at each price level. This would replace the current method, where prices are mostly fixed and based on pre-set rules. Fetcherr claims its tool has already increased airline revenue by up to 9%, and Delta has seen “amazingly favorable” results so far.
At the same time, Delta is also finding smart ways to work around trade issues while keeping its planes flying. With some of its new Airbus (EADSY) A321neo jets stuck in Europe waiting for seat approvals, Delta has started removing their Pratt & Whitney (RTX) engines and shipping them back to the U.S. These engines are then being used in older planes that have turbine problems. This move not only helps Delta keep its fleet running smoothly but also helps avoid paying U.S. tariffs on aircraft imported from Europe. Indeed, CEO Ed Bastian made it clear that Delta does not plan to pay any tariffs and will continue pulling engines from new planes until a trade deal is reached.
Is DAL Stock a Good Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on DAL stock based on 12 Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average DAL price target of $63.23 per share implies 13% upside potential.
