Delta Air Lines Q2 2025 Earnings Report

Delta Air Lines EPS Results

• Actual EPS: $2.10
• Consensus EPS: $2.01
• Beat/Miss: Beat by +$0.09
• One Year Ago EPS: $2.36

Delta Air Lines Revenue Results

• Actual Revenue: $15,507,000.00 billion
• Expected Revenue: $16.16 billion
• Beat/Miss: Beat by +$15,506,983.84 billion
• YoY Revenue Growth: -0.10%

Delta Air Lines Announcement Details

• Quarter: Q2 2025
• Date: 7/10/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, July 10, 2025
• Conference Call Time: 10:00AM ET

Delta Air Lines (NYSE:DAL) provides scheduled air transportation for passengers and cargo in the United States and internationally. The company operates through two segments, Airline and Refinery. Its domestic network centered on core hubs in Atlanta, Minneapolis-St. Paul, Detroit, and Salt Lake City, as well as coastal hub positions in Boston, Los Angeles, New York-LaGuardia, New York-JFK, and Seattle; and international network centered on hubs and market presence in Amsterdam, Bogota, Lima, Mexico City, London-Heathrow, Paris-Charles de Gaulle, Sao Paulo, Seoul-Incheon, and Tokyo. The company sells its tickets through various distribution channels, including delta.com and the Fly Delta app; acts as a reservations specialists; and operates online travel and traditional brick and mortar agencies. It also provides aircraft maintenance and engineering support, repair, and overhaul services; and vacation packages to third-party consumers. The company operates through a fleet of approximately 1,273 aircrafts. Delta Air Lines, Inc. was founded in 1924 and is based in Atlanta, Georgia.

Delta Air Lines Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Delta reported a pretax income of $1.8 billion, earnings of $2.10 per share, a 13.2% operating margin and generated $700 million of free cash flow in the quarter while raising its quarterly dividend by 25%.
• Neutral Sentiment: Overall travel demand has stabilized with diversified revenue streams making up ~60% of sales, though main cabin traffic and off-peak periods remain soft compared to last year.
• Positive Sentiment: Delta has actively reduced main cabin and off-peak capacity post-summer and notes the industry has removed 4 points of domestic capacity, which is supporting unit revenue trends heading into the fall.
• Positive Sentiment: International strategy is delivering value through equity stakes that produced a > $700 million mark-to-market gain and new investments in WestJet and Indigo to enhance global connectivity.
• Positive Sentiment: Management expects Q3 non-fuel unit costs to be flat to down and reaffirmed full-year guidance of $5.25 – $6.25 EPS and $3 – $4 billion in free cash flow, while planning to reduce debt by $3 billion.

Presentation

[Operator]

Good morning, everyone, and welcome to the Delta Air Lines June Quarter twenty twenty five Financial Results Conference Call. My name is Matthew, and I will be your coordinator. At this time, all participants are on a listen only mode until we conduct a question and answer session following the presentation. As a reminder, today's call is being recorded. If you have any questions or comments during the presentation, you may press I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations. Please go ahead.

[Julie Stewart, VP - IR & Corporate Development at Delta Air Lines]

Thank you, Matthew. Good morning, everyone, and thanks for joining us for our June. Joining us from Atlanta today are our CEO, Ed Bastian our President, Glenn Hollenstein and our CFO, Dan Jenke. Ed will open the call with an overview of Delta's performance and strategy. Glenn will provide an update on the revenue environment, and Dan will discuss costs and our balance sheet.

[Julie Stewart, VP - IR & Corporate Development at Delta Air Lines]

After the prepared remarks, we'll take analyst questions. We ask that you please limit yourself to one question and a brief follow-up so that we can get to as many of you as possible. After the analyst Q and A, we will move to our media questions. Today's discussion contains forward looking statements that represent our beliefs or expectations about future events. All forward looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward looking statements.

[Julie Stewart, VP - IR & Corporate Development at Delta Air Lines]

Some of the factors that may cause such differences are described in Delta's SEC filings. We'll also discuss non GAAP financial measures, and all results exclude special items unless otherwise noted. Year over year figures compare against results as reported unless otherwise stated. You can find a reconciliation of our non GAAP measures on the Investor Relations page at ir.delta.com. And with that, I'll turn the call over to Ed.

[Ed Bastian, CEO at Delta Air Lines]

Thank you, Julie, and good morning, everyone. We do appreciate you joining us today. Before we start, I'd like to take a moment to acknowledge the devastating events in Central Texas. Our hearts go out to the families and the communities that have been impacted. Delta is supporting the American Red Cross and their relief efforts to aid those affected.

[Ed Bastian, CEO at Delta Air Lines]

Earlier this morning, we reported June results posting pretax income of $1,800,000,000 or earnings of $2.1 per share on record quarterly revenue in line with our April guidance. This performance reflects strong execution in a demand environment that has stabilized and the continued resilience of our diverse high margin revenue streams. We achieved an operating margin of 13.2% and generated $700,000,000 of free cash flow during the quarter, bringing our year to date free cash flow to $2,000,000,000 With strong cash generation, we continue to repay debt and announced a 25% increase to our quarterly dividend. I'm proud of the team for delivering strong financial and operational results in the first half of our centennial year. In a dynamic and somewhat unpredictable environment, our team has stayed focused, controlling what we can control and executing with discipline.

[Ed Bastian, CEO at Delta Air Lines]

Operationally, Delta once again led network peers across key reliability and customer experience metrics, including on time performance, completion factor and Net Promoter Score. This strong performance underscores the resilience of our operation and the exceptional efforts of our teams to take care of our customers despite greater than normal summer storms across our system. Consistent with Delta's long standing commitment to industry leading total rewards for industry leading performance, we rewarded our people with a well deserved base pay increase of 4% during the quarter. And we're also on track for another industry leading profit sharing payout next February. Turning to demand, the environment has been stable since resetting to a lower growth rate earlier this year.

[Ed Bastian, CEO at Delta Air Lines]

Overall demand for air travel remains similar to last year with softness largely contained to main cabin and particularly during off peak periods. Diversified revenue streams, which make up nearly 60% of Delta's revenue remain resilient. The fundamentals of The U. S. Economy are solid.

[Ed Bastian, CEO at Delta Air Lines]

Our core consumer is in good shape and continues to prioritize travel and affinity for Delta's brand has never been stronger. This is evidenced by the sustained strength of our premium products and our industry leading co brand card with consumer spend growth on the Delta American Express card up double digits in the first half of the year. The recent passage of the reconciliation package creates certainty around tax policy. And with continued progress on trade negotiations, we expect both consumer and corporate confidence to improve in the second half of the year, creating the environment for travel demand to accelerate. On the supply side, we're encouraged by the industry's actions to align capacity with demand as we move beyond the peak summer period.

[Ed Bastian, CEO at Delta Air Lines]

Importantly, seats at the lower end of the market are scheduled to contract as carriers adjust to the environment and work to improve financial performance. Against this backdrop, Delta remains very well positioned. We have also adjusted to a lower growth environment. And as discussed in April, our focus is managing the levers in our control to generate strong earnings and free cash flow. This includes adjusting our capacity to match demand and aggressively managing our cost base to deliver on our commitments.

[Ed Bastian, CEO at Delta Air Lines]

For the September, the midpoint of our guidance is for earnings per share flat to last year on low single digit revenue growth and a double digit operating margin. The upper end of our outlook positions us to deliver earnings for the first nine months of the year that are flat with 2024. While not the growth we are planning for at the start of the year, this would represent solid performance in a very dynamic environment and highlights the durability of our business model as well as the growing divergence that we're seeing across the industry. Reflecting our confidence in the business, we are restoring financial guidance for the full year. We expect to deliver earnings per share of $5.25 to $6.25 and free cash flow of 3,000,000,000 to $4,000,000,000 This free cash flow outlook is within our long term target range and enables us to pay down $3,000,000,000 of debt this year while also returning cash to shareholders.

[Ed Bastian, CEO at Delta Air Lines]

Looking beyond 2025, I confident in our ability to deliver financial performance that is consistent with the three to five year framework we outlined for you last fall. In our one hundredth year of flight, our strategic focus is clear. We're continuing to invest in elevating the world's best airline, expanding our global footprint, and transforming through technology. Globally, we have strengthened our network through a portfolio of best in class partnerships, providing access to over 90% of global demand via nonstop or one stop service. What sets our international strategy apart is how we create value through both our global partnerships and our equity investments in them.

[Ed Bastian, CEO at Delta Air Lines]

This quarter, we saw meaningful appreciation in our GAAP results and the value of several of our equity stakes with a more than $700,000,000 mark to market gain underscoring the strength and health of our portfolio. We also announced two new opportunities, further enhancing our long term international growth potential. Our recently announced equity stake in WestJet helped solidify our standing as the carrier of The Americas, and our relationship with Indigo is a critical next step to establish connectivity between India, Europe and North America with India's largest and fastest growing airline. We are also continuing to make meaningful investments in technology across the business. For our customers, we're enhancing the travel experience with Delta Concierge, our virtual personal assistant built into the FlyDelta app that is launching later this year.

[Ed Bastian, CEO at Delta Air Lines]

In the operation, we're driving efficiency through predictive intelligence that improves resource availability and optimizes maintenance. And commercially, we're optimizing revenue through our partnership with Fetcher, leveraging AI enhanced pricing solutions. While we are still in the test phase, results are encouraging. As has always been the case, our greatest advantage though is our people and their unmatched skill, dedication and commitment to serving our customers. In closing, we are focused on leveraging our competitive strengths and our scale advantage while controlling what we can to deliver for our customers, our employees and our owners.

[Ed Bastian, CEO at Delta Air Lines]

Our Centennial year is a powerful opportunity to demonstrate the magnitude of the differentiation that we have created and the growing durability of our financial performance. Thank you again for joining us. And with that, I'll turn it over to Glenn and to Dan to cover the details of the quarter.

[Glen Hauenstein, President at Delta Air Lines]

Thank you, Ed, and good morning. I want to begin by expressing my appreciation to the entire Delta team for your dedication throughout this busy summer travel season and to our customers for continuing to place their trust in Delta. June revenue increased approximately 1% year over year to 15,500,000,000.0 in line with our April guidance range. During the quarter, demand trends stabilized at levels that are flat to last year. Our teams did a great job optimizing revenue performance in this environment by leveraging Delta's structural advantages and engaging customers beyond flight to generate a revenue premium to the rest of the industry.

[Glen Hauenstein, President at Delta Air Lines]

Diverse high margin revenue streams continue to show resilience, growing mid single digits year over year and driving double digit operating margins. Premium revenue grew 5% over the prior year, outpacing main cabin. We are actively rolling out expanded premium cabins in both domestic and international markets and have recently begun booking tickets for travel this fall with our newly refined and further segmented cabin products. Early results are positive, and we expect this to be a long term driver of margin expansion. Loyalty revenue grew 8% as customer engagement reached new records with millennial and Gen Z segments representing nearly 50% of our active member base.

[Glen Hauenstein, President at Delta Air Lines]

This positions us well to build long term customer loyalty and capture more share of wallet through our expanding ecosystem. Our best in class partnership with American Express continues to grow and lead the broader consumer card industry. In the quarter, we saw a record level of spend on our card portfolio, highlighting both the strength of our customer and the appeal of our program. Renumeration from American Express was $2,000,000,000 up 10% over the prior year growth and momentum in new card acquisitions. We remain on track for full year remuneration of approximately $8,000,000,000 providing durability to both earnings and cash flow.

[Glen Hauenstein, President at Delta Air Lines]

We benefit from a highly engaged, high spending card member base, customers who are deeply loyal to Delta and possess strong credit profiles. Revenue from Delta's travel products portfolio grew 8% with significant growth in cars, stays, and cruise products as a record percentage of customers added travel products to their flight bookings. Cargo revenue grew 7% year over year on higher yields and MRO revenue growth accelerated to 29% over prior year on higher volumes and work scopes. Corporate revenue improved modestly year over year and Delta share premium remains at historic highs. From a profitability perspective, margins are solid in all hubs and geographies with our strongest margins in our domestic core hubs where we have industry leading scale and connectivity. International margins have structurally improved and become more durable, reflecting the success of our multiyear international transformation through strategic investments in network, fleet and our partnerships.

[Glen Hauenstein, President at Delta Air Lines]

Main cabin margins remain soft across both domestic and international markets. We expect improvement as industry demand and supply rebalances, and we continue to make progress on our commercial initiatives laid out in Investor Day last year. Post summer, we have proactively adjusted capacity to address areas of softness with reductions in main cabin and off peak flying beginning in August on a year over year basis. While consumer confidence has improved from the lows we saw earlier this spring, we're monitoring booking trends closely and leveraging Delta's strength to optimize revenue in this environment. For the September, we expect revenue to be flat to up 4% year over year.

[Glen Hauenstein, President at Delta Air Lines]

Our outlook reflects stable demand across both consumer and corporate segments with the midpoint similar to second quarter performance excluding the impact from lapping the CrowdStrike caused outage. Diverse revenue streams remain resilient and as the industry further rationalizes domestic supply, we expect unit revenue trends to improve through the back half of the year. Internationally, while we are seeing some unit revenue pressure through the peak summer months, trends are improving as we move into the shoulder season, September and beyond. This is most pronounced in the Transatlantic where softness in European outbound travel is impacting July and August. At the same time, there is a continued shift from U.

[Glen Hauenstein, President at Delta Air Lines]

S. Point of sale demand into the shoulder periods as consumers look to avoid peak crowds and summer heat. Our new markets are performing very well and we look ahead to 2026, we're incorporating these evolving seasonal patterns into our international network planning to align with customer preferences and travel behavior. While focused on optimizing revenues and margins in the current environment, we are also making steady progress on our longer term priorities. That includes investing in the travel experience, expanding customer choice, deepening loyalty to the Delta brand, and engaging customers beyond their flight.

[Glen Hauenstein, President at Delta Air Lines]

In the air, we continue to invest in expanding premium cabins and are elevating the Delta One experience with new premium amenities, and our rollout of fast free Wi Fi for SkyMiles members is nearly complete. On the ground, we're expanding our clubs and premium lounge footprint. Just a few weeks ago in Seattle, we opened a new Sky Club and our fourth Delta One lounge. With 57 clubs and lounges, Delta customers have access to the largest and most awarded lounge network of any U. S.

[Glen Hauenstein, President at Delta Air Lines]

Airline. We are also growing the value of SkyMiles memberships by expanding ways to earn miles beyond travel, including our newest partnership with Uber, which launched during this quarter. In closing, our consistent improvement strategy is delivering a sustained unit revenue premium and returns well in excess of our cost of capital. Our ability to deliver these strong results while the broader industry works to reestablish equilibrium underscores Delta's growing differentiation and enduring leadership position. And with that, I'll turn it over to Dan to talk about financials.

[Dan Janki, EVP and CFO at Delta Air Lines]

Thank you, Glenn, and good morning, everyone. For the June, we delivered pretax income of $1,800,000,000 with an operating margin of 13.2% and earnings of $2.1 dollars per share consistent with our April guidance. Non fuel unit cost growth of 2.7% was similar to the March. Cost execution continues to be an important focus across the enterprise. I'd like to thank the teams for delivering strong results in line with our expectations despite a challenging operating environment.

[Dan Janki, EVP and CFO at Delta Air Lines]

Severe weather impacted operations throughout the quarter with a number of irregular operation days more than 50% higher than last year and our historical average. For the first half of the year, operating cash flow was $4,300,000,000 dollars and after reinvesting $2,300,000,000 in the business, we generated free cash flow of $2,000,000,000 Strong cash generation supported debt paydown of $1,500,000,000 through the first half with gross leverage ending at 2.5 times. After reinvesting in the business, debt reduction remains our top capital allocation priority. Delta is investment grade rated at all three major credit agencies, has a fully funded pension and significant unencumbered assets and secured debt capacity. In addition to using cash flow for debt maturities, we are opportunistically prepaying and refinancing high cost debt where we can drive economic benefit. During the quarter, we successfully completed a $2,000,000,000 unsecured note offering and achieved a blended rate of 5.1%. This transaction creates a marker for the industry and demonstrates the strength of our investment grade balance sheet, which has an average cost of debt of 4.6%. At the same time, we are committed to shareholder returns.

[Dan Janki, EVP and CFO at Delta Air Lines]

We recently announced a 25% increase to our quarterly dividend starting in the third quarter, bringing our annual commitment to approximately $500,000,000 And at our current price, this puts our annualized dividend yield at 1.5%, and that's ahead of the S and P 500 average. Now turning to our outlook. For the September, we expect earnings of $1.25 to $1.75 per share and a 9% to 11% operating margin, and that's compared to 9.4 last year. As Glenn discussed, our outlook for revenue growth is flat to up 4% compared to last year. On the cost side, we continue to execute well and make progress on driving efficiency.

[Dan Janki, EVP and CFO at Delta Air Lines]

We expect third quarter will mark our strongest cost performance of the year with non fuel unit costs flat to down compared to 2024. We are effectively managing the levers within our control, reducing capacity growth post summer and managing our cost base to deliver on our long term targets of up low single digit non fuel unit cost growth. We expect our performance to lead the industry in year over year unit cost growth for the second consecutive year, improving our relative cost position. With a stable demand environment, a more constructive industry supply backdrop, strong cost execution and current fuel prices, we are positioned to deliver full year results that reflect Delta's growing differentiation and durability. For the full year, we expect to deliver earnings per share of $5.25 to $6.25 and free cash flow of 3,000,000,000 to $4,000,000,000 This free cash flow outlook is within our long term target and enables us to pay down $3,000,000,000 of debt while also returning cash to shareholders.

[Dan Janki, EVP and CFO at Delta Air Lines]

Looking beyond 2025, we remain confident in our ability to achieve our long term financial targets we outlined last November, delivering on margin expansion, durable earnings and cash flow and reducing leverage to the lowest level in company's history. This confidence is grounded in Delta's enduring competitive advantages, positioning us to generate sustained value for our owners. In closing, I want to extend my sincere thanks to the entire Delta team for their dedication to one another and to our customers, especially during this busy summer travel season. And with that, I'll turn it back to Julie for Q and A.

[Julie Stewart, VP - IR & Corporate Development at Delta Air Lines]

Thank you, Dan. Matthew, can you please remind the analysts how to enter the question queue?

[Operator]

Certainly. At this time, we'll be conducting a question and answer session. Thank you. Your first question is coming from Ravi Shanker from Morgan Stanley. Your line is live.

[Ravi Shanker, Analyst at Morgan Stanley]

Great. Thanks. Good morning, everyone. Ed or Glenn, I think you said in your prepared remarks that you're encouraged by industry supply actions, especially lower end capacity coming out. Can you elaborate on that a little bit more and give us your thoughts on industry capacity in 3Q and 4Q?

[Ravi Shanker, Analyst at Morgan Stanley]

Do you think we are at a point that we were last summer where demand and supply came into balance and that was supportive of RASM even in a falling jet fuel environment?

[Glen Hauenstein, President at Delta Air Lines]

Hey, Ravi. It's Glenn. When you look back, I think when you look back into April for domestic, for example, we were industry was up around three. And as you move forward through the period between May, June, July, August and then into September, it appears as though the industry has taken four points of capacity out. And by the time we hit September, domestic industry seats are actually down close to 1%.

[Glen Hauenstein, President at Delta Air Lines]

So that's a significant reduction in capacity, and it's a significant reduction in off peak capacity that's even greater than that. So I think the industry has done an amazing job. And as you know, I've been in this business quite a long time, and I've really never seen that amount of capacity come out in a nonrecessionary environment. And I don't think anybody's predicting that we're in a recession. So I think this is a really good indication that the industry is doing what it needs to do to restore profitability.

[Ravi Shanker, Analyst at Morgan Stanley]

Understood. That's very helpful. Maybe for my follow-up, Glenn, can you just give us a little more color on the cabin segmentation? Again, how that's being received? What that means for premium cabin? And

[Glen Hauenstein, President at Delta Air Lines]

expand, and so we're highly focused on continuing to provide improved service to those customers and more segmentation. And I think the segmentation that we've done in main cabin is kind of the template that we're going to bring to all of our premium cabins over time because different people have different needs. And the more choices we can give customer with the more price points that provide value, the better I think the answer is gonna be for Delta and for our customers. So it's all about giving people more choice, more pricing options and more products and services in every cabin.

[Ravi Shanker, Analyst at Morgan Stanley]

Very good. Thank you.

[Operator]

Thank you. Your next question is coming from Jamie Baker from JPMorgan. Your line is live.

[Jamie Baker, Managing Director at JP Morgan]

Good morning. A question for Glenn and thanks to Robbie because it was a good lead in. So the spread between premium growth and mean cabin contraction widened to 10 points in the second quarter. That spread has been accelerating for the past several quarters, but it seems that this is a little bit more about main cabin weakness than just premium resilience. So can I ask if premium trends whether you define that by revenue or maybe I don't know paid load factor, did it match your expectations in the second quarter?

[Jamie Baker, Managing Director at JP Morgan]

And is it safe to assume given your earlier commentary that we see at least another quarter of expansion?

[Glen Hauenstein, President at Delta Air Lines]

I think there's nothing in any of the forward bookings that would have us indicate that there's a diminishing demand for premium cabins or services. And so as we continue to look reevaluate even now the LOP is on the airplanes and put more and more premium, we are able to do two things. One is sell more of it and two is accommodate more of our heaviest frequent flyers with upgrades, which is something we wanna continue to do to provide additional value to them. So we're very excited about where we sit today and we're very excited about the possibilities moving forward.

[Jamie Baker, Managing Director at JP Morgan]

Okay. And then a follow-up for you Glenn or maybe this is for Ed. One of the post COVID realities was workplace mobility, flexibility, advent of bleacher. And Ed, I know you're not a fan of that term, neither am I. But when I think of the return to office trends and look, maybe biased, my company has certainly been vocal on this topic.

[Jamie Baker, Managing Director at JP Morgan]

But I guess the question is whether your demand forecasts are at all tempered by the fact that at least for some of us we can't escape to Europe with impunity the way we might have a year or two ago. Any thoughts on that? And maybe I'm just projecting.

[Glen Hauenstein, President at Delta Air Lines]

I think a little bit you're projecting. I think the workplace under any circumstances has become more flexible than it was pre pandemic. And people, while they may be required to be in the office a few days a week all the way up to five days a week, all of us, I think, have more flexibility on being places we wanna be. And we continue to see that embedded in the demand strength here. You know, I I don't think the the offset of that is as people continue to return to the office this fall, there could be even more upside in the business travel.

[Glen Hauenstein, President at Delta Air Lines]

We have we don't have that in our forecast, but, you know, we'll see. We're optimistic that business has been pretty resilient through this part of the demand set, and hopefully it accelerates as we move into the fall.

[Ed Bastian, CEO at Delta Air Lines]

Jamie, this is Ed. I'll tag on to Glenn's comments with one additional thought. We shouldn't lose sight of the fact that business travel, while it has returned, is still very much in line with where it had been versus where the size of the economy is today, particularly the growth rate. On any true comp, have easily another 15% or 20% of business travel that isn't being done, that used to be done. And I think with all the new tools and flexibility models and being in person is more important than ever in this turbulent world.

[Ed Bastian, CEO at Delta Air Lines]

Think there's going to be a lot more opportunity yet to see business growth. Gentlemen, thank you both. Thank

[Operator]

you. Your next question is coming from David Vernon from Bernstein. Your line is live.

[David Vernon, MD & Senior Analyst at Bernstein]

Hey, good morning guys and thanks for taking the time. So first question on the capacity outlook as we're looking at the second half of the year. I mean, clearly, there's no explicit sort of guidance around what the capacity is going to look like. I'm kind of wondering how much of the guide for improving unit revenue trends is based on kind of what you think you can control in your network versus what you're expecting peers to do on the capacity front.

[Glen Hauenstein, President at Delta Air Lines]

I'm sorry. We're kind of fading out at the end of that question. Could you

[David Vernon, MD & Senior Analyst at Bernstein]

Oh, sorry.

[Glen Hauenstein, President at Delta Air Lines]

Just repeat?

[David Vernon, MD & Senior Analyst at Bernstein]

Yeah. I'm I'm I'm trying to figure out, you know, how much of the guide for two h is based on on what you think you can control in your network versus what you're expecting peers to do on the capacity front. Right? Are you are you kinda building the forecast based on what you're expecting the industry to do or based on what you think you can do within your customers in your network?

[Glen Hauenstein, President at Delta Air Lines]

I think it's a a combination of both. We, we certainly know what we can control, and there are pieces that we don't control, which is the other airline's capacity. But from what we see in the open for sale tapes, when we think it's probably loaded well through September at this point, there's probably some more adjustments that need to come in the back half of the year, October through December. But, and what other other carriers are saying about their capacity levels. So I feel it's a combination of both.

[Glen Hauenstein, President at Delta Air Lines]

Certainly, we can control what we can control in our customer base, but also we we're responding to what the macro environment is for all capacity in the industry.

[David Vernon, MD & Senior Analyst at Bernstein]

Alright. Thanks for that. And then maybe, Ed, as a bigger picture question on, aircraft deliveries. Right? Last time we spoke, you know, the tariff news had just hit, and people were kind of trying to figure out what this is gonna mean.

[David Vernon, MD & Senior Analyst at Bernstein]

Have you, do you have any updated thoughts on on how tariffs are going to impact the order book? And and what are the discussions that you're having right now around, with with industry or with with the government around, trying to make sure we don't see disruptions in the order book?

[Ed Bastian, CEO at Delta Air Lines]

Well, my thoughts, David, haven't changed. We're not planning on paying any tariffs for aircraft deliveries, and that's a pretty strong point of view here on the Delta side. That said, we are encouraged by the progress that we see happening in the discussions in Washington. We are heartened by The UK, US acknowledgment in the the recent trade agreement that the 1979 Aviation Act where there would be no tariffs and and on a a reciprocal basis would be honored, and we hope that template will continue in future negotiations. This is our industry is one that's maybe unique in our country's economy in which the size of the surplus that we throw off, given the strength of our industry for aviation and aerospace, is the largest in the world.

[Ed Bastian, CEO at Delta Air Lines]

And this is not an area where tariffs would do anything but hurt U. S. Companies and consumers.

[David Vernon, MD & Senior Analyst at Bernstein]

All right. Thank you.

[Operator]

Thank you. Your next question is coming from Tom Fitzgerald from TD Cowen. Your line is live.

[Thomas Fitzgerald, Senior Hotels And Online Travel Analyst at TD Cowen]

Hey, everyone. Thanks so much for the time. I wanted to touch in on your comment on Fetcher. Think back at Investor Day, you mentioned that their revenue management solutions were being deployed on about 1% of the network. I'm wondering if you could tell us where that number stands today and then just provide a little more details on what you've learned with another six months of experimenting with AI and revenue management.

[Glen Hauenstein, President at Delta Air Lines]

So today, we're about 3% of domestic, and and that's our goal is to have about 20% by the end of the year, and that's a goal. I mean, we we can report back on what the actual numbers are, but you have to train these models as you might and and you have to give it multiple opportunities to provide different results. So we're in heavy testing phase. We like what we see. We like it a lot, and we're continuing to roll it out.

[Glen Hauenstein, President at Delta Air Lines]

But we're going to take our time and make sure that the rollout is successful as opposed to trying to rush it and risk that there are unwanted answers in there. So this this the more data it has and the more cases we give it, the more it learns, and we're really excited about it, and we're really excited about partnering with Petcher.

[Thomas Fitzgerald, Senior Hotels And Online Travel Analyst at TD Cowen]

Okay. That's really helpful. And then just as a follow-up, you found it constructive on corporate today. I'm just curious what you're hearing from your some of your key accounts for the post Labor Day environment and then how you characterize demand across some of the different sectors like financial services, tech, autos, agriculture, etcetera. Thanks again for the time.

[Glen Hauenstein, President at Delta Air Lines]

Sure. You know, most most of our, survey results indicate that people are going to spend the same or more, and they usually do that. So we'll we'll see as it materializes. But as far as the sectors go, really, the favorable sectors are banking, consultancies, and technology, and the laggards are autos and manufacturing, which is kind of surprising given the way the the government is trying to bring manufacturing back. So hopefully, will turn around here in the not too distant future.

[Operator]

Thank you. Your next question is coming from Andrew Didora from Bank of America. Your line is live.

[Andrew Didora, Senior Equity Research Analyst at Bank of America Merrill Lynch]

Hi, good morning everyone. So Ed, you mentioned on TV this morning that you see the consumer pullback starting to wane here. I guess what are the biggest data points that you see driving it today? And can you potentially quantify what you see in your booking curves to support that right now?

[Ed Bastian, CEO at Delta Air Lines]

Sure, Andrew. I'm talking not specifically as much to the airline industry, think consumer data broadly. If you look at any measure of consumer confidence, it certainly took a big dip in the early part of the year and then again in April after the Independence Day or Liberation Day, sorry, announcements were made and has been slowly starting to to climb back. I think the our consumer particularly, who I'm also speaking to, is a consumer that has not been nearly as impacted by many of the consumers that are pulling down some of those surveys, that be the lower income survey. Our target consumer is a household with $100,000 or more of annual earnings, which is not, by the way, an elite definition.

[Ed Bastian, CEO at Delta Air Lines]

That's 40% of all U. S. Households. And that cohort has accumulated a significant amount of wealth in the post COVID era. And we were worried, I think, in earlier part of the year about the wealth effect what's going on in the markets and other financial instruments, but that's corrected itself.

[Ed Bastian, CEO at Delta Air Lines]

The market's beyond where it was even at the start of the year. So we look at a lot of data points. We talk to a lot of businesses, a lot of leaders. And there's a growing sentiment of confidence moving forward and ready to move our economy forward. One other thing that I did get a chance to talk about this morning, the first quarter actual results came in and the economy actually shrank a bit just a tad, The U.

[Ed Bastian, CEO at Delta Air Lines]

S. Economy. And you know how highly correlated airline revenues are to the overall economy. The most recent Fed data is expecting in the second quarter and the full year overall U. S.

[Ed Bastian, CEO at Delta Air Lines]

Economic growth to decline, but still be positive at 1.5. So you have a lot of data in there and you try to read through that, but there seems to be growing optimism. But clearly, we still have a long ways to go.

[Glen Hauenstein, President at Delta Air Lines]

And if I could just add some factoid, I've been hoping we get a question in regards. We had our highest cash sales day of in the month of July for the month of July in a hundred year history yesterday. So, advanced bookings are doing well, and people are starting. Think at the beginning when people were fearful, we saw the further out bookings going away. We see those starting to return again, and hopefully, trends continue.

[Andrew Didora, Senior Equity Research Analyst at Bank of America Merrill Lynch]

Got it. Thank thank you for those thoughts. Then just add the 3,000,000,000 to $4,000,000,000 of free cash flow in this environment, I think is pretty powerful. I know you've been repaying debt. You increased the dividend.

[Andrew Didora, Senior Equity Research Analyst at Bank of America Merrill Lynch]

But how should we think about the deployment of future cash flow, particularly in respect to a buyback here? Well,

[Ed Bastian, CEO at Delta Air Lines]

as you know, Andrew, we did file a shelf for a billion dollars buyback. In this environment, our priority continues to be debt repayment and the growth we recently announced around the dividend. It's a three year shelf. I fully anticipate over the course of the three years, will exercise that for share repurchases. But in the interim period, we're still heavily focused on debt reduction.

[Andrew Didora, Senior Equity Research Analyst at Bank of America Merrill Lynch]

Great. Thank you.

[Operator]

Thank you. Your next question is coming from Connor Cunningham from Melius Research. Your line is live.

[Conor Cunningham, Director – Travel & Transports Research at Melius Research LLC]

Hi, everyone. Thank you. I've had a lot of questions on visibility today. And so I'm just I'm just trying to get a little bit more confidence. And I know you're not guiding four q, but you can back into it, obviously.

[Conor Cunningham, Director – Travel & Transports Research at Melius Research LLC]

And and it's your assumptions kind of assume a fairly substantial I don't want a substantial, but a pretty meaningful move in unit revenue performance. It may be an inflection in the fourth quarter. So just trying to understand, can you just frame up the confidence there? It just seems like it's much more US domestic focus now than it is international. Just maybe maybe you could talk about the geographies within the context of, of what you're seeing in in in in '4 q. I know it's early. Thank you.

[Glen Hauenstein, President at Delta Air Lines]

Sure. I think we have, the most visibility on long haul international, which is inflecting up as you head out of the peak summer into the shoulder season. So that's part of the base of what we see transforming to a better result in the fourth quarter than the third quarter in terms of unit revenue performance. And then, of course, the domestic is hopefully going to inflect back to positive here. And all trends are all forward bookings indicate that it is moving in the right direction.

[Glen Hauenstein, President at Delta Air Lines]

And sometime this fall, I would believe that we would inflect back into positive. I'm not predicting the date yet, but, the indications of the early bookings are a much better base than we had for the peak summer, at sixty or ninety days out.

[Ed Bastian, CEO at Delta Air Lines]

And, and, Conor, this is a you know, to add on to that, it's also one of the reasons we gave a pretty wide range in terms of the full year guidance. I know everyone focuses on the midpoint. We're not that we're not that good in terms of that level of accuracy, and and we did have a we do have a pretty, pretty wide range still given we know there's a lot more to come yet though.

[Conor Cunningham, Director – Travel & Transports Research at Melius Research LLC]

Okay. And maybe I can go back to Andrew's comments on free cash flow. The 3,000,000,000 to $4,000,000,000 it's great that we're talking about that again. You know, I'm just trying to understand it seems somewhat counter seasonal in the second half and I was hoping you could just bridge to how you get there driving the incremental $1,500,000,000 Is there something within the tax code, the changes to the tax bill that drive up that a little bit? And maybe you can give an assumption around your long term cash taxes just given the new tax bill, that would be helpful. Thank you.

[Dan Janki, EVP and CFO at Delta Air Lines]

Yes. Connor, thank you. Maybe a couple of things. I'll start with taxes just to clear that and then move to the cash flow drivers on. Cash taxes, as we talked about last November and came into the year, we expected to be a cash taxpayer in the mid kind of single digit way level this year.

[Dan Janki, EVP and CFO at Delta Air Lines]

But with both the change in the demand and profitability environment, that won't transpire. And now we get the benefit of earn and see or close to earn and see as it relates to depreciation acceleration. So that will at least be deferred a full year. So potentially a low single digit cash taxpayer next year and then that would arch up over a longer term period, multiple year period at a mid teens is how we see it today. But that will adjust as we are more and look at our growth plans and our fleet plans associated with that and the underlying business.

[Dan Janki, EVP and CFO at Delta Air Lines]

As it relates to cash flow, think about where we were are through the half at $2,000,000,000 things that as we go into the back half of the year, we're currently looking at all our investments and the pacing of that, and that's one lever that we have. Also, $2,000,000,000 in the first half was impacted by the compression of the booking curve. And you think about that where you would have been that was $405,100,000,000 dollars associated So any type of normalization benefits with that. And then third and one of our larger levers that we continue to have continues to be the working capital that we've built up in our operation as we restored the network and, and our operation.

[Dan Janki, EVP and CFO at Delta Air Lines]

And the teams are continuing to work on things across our operations, but particularly in maintenance and even with our third party MRO activity where we've carried a lot of material. And we have the opportunity to continue as we reduce turnaround times and other elements to release that capital that we built up through the last few years and release that back into cash flow. And that's true both across our operations crew, also true with other elements of business. So we're working all those levers and to the point feel confident in the 3,000,000,000 to $4,000,000,000 range.

[Conor Cunningham, Director – Travel & Transports Research at Melius Research LLC]

Awesome. Thank you.

[Operator]

Thank you. Your next question is coming from Duane Pfennigwerth from Evercore ISI. Your line is live.

[Duane Pfennigwerth, Senior MD - Equity Research at Evercore]

Hey, thanks. Good morning. Wanted to ask you a couple of credit card related questions, a data question and a growth question. Maybe for Glenn. First on the data, it just feels like there's a lot more credit card spend data swirling around.

[Duane Pfennigwerth, Senior MD - Equity Research at Evercore]

Many of the firms on this call are saying their clients data monthly or maybe even weekly. What do you think the limitations of this credit card data might be? And I'm thinking about maybe different segments of customers or changes in the booking curve. What do you think the data might be missing?

[Glen Hauenstein, President at Delta Air Lines]

You know, I I haven't spent a lot of time thinking about the data that comes out from others. I think I I watched a comment this morning on somebody talking about credit card spend and that it was much worse at the lower end of the spectrum than it was at the for higher end. And I think that's what we are indicating here is we have the higher end. The higher end seems to feel more comfortable and is actually growing their disposable income. And so I think when you look at all those numbers, it's an amalgamation of a lot of subsets that we don't have.

[Duane Pfennigwerth, Senior MD - Equity Research at Evercore]

That's helpful. And then on your own co brand, I think we understand or appreciate the competitive dynamics within the airline industry. But how do you think about Delta's competitive advantages outside of the airline industry as we see high end cards, maybe high end clubs, but not attached specifically to an airline brand?

[Glen Hauenstein, President at Delta Air Lines]

Right. We spend a lot of time thinking about this and how we continue to enhance the benefits. And I'll just give you a satisfaction number. Holders of our card have had the highest satisfaction in history of our card in the last quarter. So continuing to innovate on the product side, continuing to provide value that people outside of our business can't provide, whether or not it's club access, whether or not it's status.

[Glen Hauenstein, President at Delta Air Lines]

And, I think the totality of what we're offering our consumer is well received, and it results in us having continued high levels of acquisition and continued high levels of spend.

[Duane Pfennigwerth, Senior MD - Equity Research at Evercore]

Thank you.

[Operator]

Thank you. Your next question is coming from Catherine O'Brien from Goldman Sachs. Your line is live.

[Catherine O'Brien, Vice President at Goldman Sachs]

Good morning, everyone. Thanks for the time. Despite a tough operational environment in the quarter, especially in Atlanta at the close of the quarter, your CASM ex came in line with plan. What else went better in the quarter to maybe offset some of those operational challenges? And do you think you can keep that momentum up going forward?

[Dan Janki, EVP and CFO at Delta Air Lines]

Drew, this is thanks. As it relates to operational performance, think this is consistent to what you've seen over the last twelve, eighteen, twenty four months from the team. Just good line of sight to things where we can drive efficiency across operation. And those types of things are what offsets normally. You have the events that we had in the abnormal irregular operations and losing some of the ASMs, and you'd have a point impact.

[Dan Janki, EVP and CFO at Delta Air Lines]

And our teams are able to execute through that because they're working on whole basket of efficiency opportunities. And for instance, you see it in the line items of the SEC, you see maintenance down, right? It's the tech ops team, and we've talked about it where we've had their costs at a high point over the last couple of years and last year hitting it. And with volume and with improvement in efficiency and turnaround and other factors are getting more effective associated with that, and you pick up that benefit. So so those types of things that, the teams are working on and working on those basket of opportunities.

[Catherine O'Brien, Vice President at Goldman Sachs]

Got it. And then and then maybe, you know, MRO revenue saw strong growth this quarter. Can you just update us on where we should be thinking MRO revenue can get to over the coming years? You know, are you guys mostly caught up on some of the delayed maintenance from the COVID error on Delta's own fleet? Like, just can you help us think about, like, how much more volume you can open up to third party over the coming months, versus last year or Thanks so much for the time.

[Dan Janki, EVP and CFO at Delta Air Lines]

No. We're we're excited about the the future of MRO. And as we talked about consistently over the last two, three, four years that, the priorities at the coming through pandemic was the restoration of the Delta network and the Delta capabilities. But really proud of the tech op team and the capabilities that we have there. And we're well positioned both on next generation equipment, but also deep competencies on all those installed legacy engine types.

[Dan Janki, EVP and CFO at Delta Air Lines]

And we're now getting back to being able to focus on that and drive that growth. You're going to see growth for the first time this year for the total year. And this is one that you're going to continue to grow well above the rate of the core airline. And I think a good marker of that was just here coming in the MRO Americas where we announced the UPS deal. Again, this is at next generation.

[Dan Janki, EVP and CFO at Delta Air Lines]

This is right in the heart of what we're really good at on the PW2000, and it's the largest in the history of Delta as it relates to the third party commercial relationship and getting that benefit along with the next generation. So this is something that can go from where it is today to $1,000,000,000 $2,000,000,000 $3,000,000,000 and continue to grow.

[Catherine O'Brien, Vice President at Goldman Sachs]

Thanks so much.

[Operator]

Thank you. Your next question is coming from Mike Linenberg from Deutsche Bank. Your line is live.

[Michael Linenberg, Analyst at Deutsche Bank]

Oh, yes. Hey, good morning, everyone. Hey, Dan, you talked about the fully funded pension. How should we think about that with respect to potential tailwinds either on the P and L or on sort of your cash flow this year? I mean, I realize that a lot of the plan I mean, the plans are frozen, but there should be some sort of benefit. Can you can you size that for us?

[Dan Janki, EVP and CFO at Delta Air Lines]

Yeah. You you you see the expense benefit from it as the expense comes down in the other income line. It's a modest benefit this year in that line. So it hasn't been material. We've been working it down as the surplus has improved.

[Dan Janki, EVP and CFO at Delta Air Lines]

And it's really about what rates do and how the asset performance comes in versus the targeted 7% rate. And every time you beat that, you do better than that 7% in the overall rate, you have an improvement in reducing that expense that you have. In fact, we feel really good. We're in here where we're close to $1,000,000,000 on a GAAP basis surplus. If you go back to a period of time five, six years ago, that was at 5,000,000,000 to $6,000,000,000 It was much greater than that a decade ago, and I think it just speaks to the financial strength and wherewithal of Delta.

[Dan Janki, EVP and CFO at Delta Air Lines]

So we're very happy that it's fully funded and it will be less and less of a drag as long as we continue to hit those metrics.

[Michael Linenberg, Analyst at Deutsche Bank]

That's great. And then just my second question, Glenn, just with respect to the booking curve, we've been hearing a lot of commentary how it just has gotten a lot closer in. I know Dan talked about on the cash flow, as that normalizes, that's going to release cash and be beneficial. Can you talk about how that has shifted and maybe whether you're seeing improvement? As we think about how much you're booked up over the next few months, is that shorter booking curve manifesting in, say, five or 10 points lower on a load factor basis or not? Any color around that would be great. Thanks.

[Glen Hauenstein, President at Delta Air Lines]

So yes, the booking curve has shifted in. And generally, there's a outside of a hundred and twenty days forward, it hasn't deteriorated that much. Inside of a 120 down to 90, it has or actually down to 60, it has. So there's a piece in there that's moved closer in, and we tend to build a lot inside the month, which we didn't do last year because a lot of those tickets were already sold. So we have seen indications that it's starting to move back out again, and I think this is very correlated to consumer confidence.

[Glen Hauenstein, President at Delta Air Lines]

As confidence returns, people will continue to book further out, which if that happens, have a very favorable impact to cash flow in the coming months.

[Michael Linenberg, Analyst at Deutsche Bank]

Great. Thanks, Juan. Thanks, Dan. Thank

[Operator]

you. Your next question is coming from Sheila Kahyaoglu from Jefferies. Your line is live.

[Sheila Kahyaoglu, Aerospace & Defense and Airlines Equity Research at Jefferies Financial Group]

Good morning, guys. Maybe the first one on the Main Cabin down 5%. How do we think about that turning positive? What were the biggest areas of weakness? How do we think about the improvement in Q3 and Q4?

[Sheila Kahyaoglu, Aerospace & Defense and Airlines Equity Research at Jefferies Financial Group]

And just, yeah, the overall time line to turn Main Cabin positive again.

[Glen Hauenstein, President at Delta Air Lines]

Right. So Main Cabin has been the weakness as we move through the year, and it's been very weak and off peak. So how we've done with it, and I think a lot of the industry, you listen to what they're all doing, is we're all taking the weakest trips out, which is what you would expect airlines to do. And they tend to be on off peak days, so Tuesdays and Wednesdays, and they tend to be at off peak times pre 6AM or post-twenty-one hundred departures. So that's really where we've concentrated in trying to eliminate those and consolidate that travel back onto the peak a little bit more.

[Glen Hauenstein, President at Delta Air Lines]

And I think you're seeing very favorable results as we move through the or I would expect to see very favorable results for Maine, Kevin, as we move through the rest of the year given what the industry is is, producing to.

[Sheila Kahyaoglu, Aerospace & Defense and Airlines Equity Research at Jefferies Financial Group]

Is there a timeline on, could it be positive next year or in '25?

[Glen Hauenstein, President at Delta Air Lines]

Oh, it could be positive this year. I'm not Okay. I'm not writing off that it could not be. I think we have a good shot of it becoming positive or at least neutral by the third quarter or fourth quarter of this year.

[Sheila Kahyaoglu, Aerospace & Defense and Airlines Equity Research at Jefferies Financial Group]

And then just maybe on the Atlantic commentary, how do you think about U. S. Non U. S. Point of sale exposure to the curve?

[Sheila Kahyaoglu, Aerospace & Defense and Airlines Equity Research at Jefferies Financial Group]

What's going on in Europe? And what are some of the best performing areas or countries versus lower performers?

[Glen Hauenstein, President at Delta Air Lines]

Well, I think there's clearly less travel coming out of Europe, but currency changes have offset a lot of that in terms of the total revenue coming out of Europe. So lower customer accounts, but higher yields given the currency has appreciated more than 10% over the past few months here. And so those kind of balance each other out with just a slight negative. And what's really driving us in the peak being a little bit lighter than the shoulders is this change in demand set from the peak summer months when everybody's on vacation, prices are really high, places are crowded, Europe's hot, and to times where it's a much more pleasurable, experience, cooler temperatures, lower, hotel rates. And so I think we've seen this systematic shift.

[Glen Hauenstein, President at Delta Air Lines]

And this is not a one year issue. This is multi years that the peak is getting less peaky and the shoulders are getting stronger. And that's happened over a three, four, five year period since back to coming out of COVID.

[Sheila Kahyaoglu, Aerospace & Defense and Airlines Equity Research at Jefferies Financial Group]

Thank you.

[Operator]

Thank you. Your next question is coming from Stephen Trent from Citi. Your line is live.

[Steve Trent, Managing Director at Citi]

Good morning, everybody, and thanks for squeezing me in. I wanted to get back just a little bit, maybe a follow-up on Andrew's question about the strong free cash flow you guys had. When we think about the co branded card remuneration around the working capital flow, I sort of recall you guys were looking to a high single digit increase in co branded card remuneration, and it perhaps is coming a little bit stronger than that, if you could elaborate, please.

[Dan Janki, EVP and CFO at Delta Air Lines]

Yes. Both card spend and the cash that we've received from Amex is up 10% in the quarter. So really good continued strong strength there.

[Steve Trent, Managing Director at Citi]

Great. Thank you, Dan. And just a quick follow-up here. I also recall your international point of sale is maybe 80 some odd percent U. S.

[Steve Trent, Managing Director at Citi]

Does that look how does that look on the co branded cards? Do you actually have a meaningful number of foreign cardholders? Or is this just pretty much entirely U. S. Cardholders?

[Glen Hauenstein, President at Delta Air Lines]

It's 99% U. S. Cardholders.

[Julie Stewart, VP - IR & Corporate Development at Delta Air Lines]

Matthew, we'll now go to our final analyst question, Savi Syth.

[Operator]

Certainly. Your last question is coming from Savi Syth from Raymond James.

[Savanthi Syth, Managing Director at Raymond James Financial]

Line is locked in morning, everyone. Good morning, everyone. If I might ask, just given the level of uncertainty that was there the last time you had this earnings call, just how has your kind of view on kind of the post summer capacity plan evolved? And if you could kind of talk about, like, on the domestic side as well as the international side.

[Glen Hauenstein, President at Delta Air Lines]

How has it evolved? Well, I think we've seen the industry continue to act responsibly and take capacity down, particularly in the off peaks and particularly in domestic main cabin. So those are the areas that have been the weakest, and I think the industry is doing a very effective job in terms of addressing that in the supplier offering. Internationally, I'd say we're in pretty good shape. I don't think everybody's winter IATA schedules are loaded yet, so we'll keep a close eye on that.

[Glen Hauenstein, President at Delta Air Lines]

But there's probably you know, that's where the, slowdown in growth has not occurred as dramatically as it has domestically yet. But I think as we move through the year, we'll see more and more of that.

[Savanthi Syth, Managing Director at Raymond James Financial]

And does that apply for your thinking, Glenn, too? Like, nothing really has changed from how your approach?

[Glen Hauenstein, President at Delta Air Lines]

No. I think a lot a lot has changed for us. We've taken, you know, several points of capacity down. Our European capacity offering as you get to the shoulder is relatively flat. I think we're up 2.5% in seats.

[Glen Hauenstein, President at Delta Air Lines]

We were up in mid- high single digits at the peak of peaks. So I think everybody is doing their fair share in terms of trying to get this back to capital returns that are in excess of our cost of capital.

[Savanthi Syth, Managing Director at Raymond James Financial]

Appreciate that. And just just a last follow-up. Just you had a comment about replicating some of the shoulder seasonal patterns on the international network. Is that is that more a Transatlantic comment? Is that kind of other, you know, Pacific and LatAm as well?

[Savanthi Syth, Managing Director at Raymond James Financial]

Just kind of curious if you could flesh that out a little bit.

[Glen Hauenstein, President at Delta Air Lines]

Well, LatAm is actually contra seasonal, so its peak is in December and January. And The Pacific is less seasonal than Europe, so this is really related to Europe, which is 60% to 65% of our total international.

[Savanthi Syth, Managing Director at Raymond James Financial]

Got it. Appreciate it. Thank you.

[Julie Stewart, VP - IR & Corporate Development at Delta Air Lines]

That will wrap up the analyst portion of the call today, and I'll now turn it over to Tim Mapes to start the media question.

[Dan Janki, EVP and CFO at Delta Air Lines]

Thank you, Julie. Matthew, if you don't mind reiterating for the members of the media the call instructions and the follow-up, please.

[Operator]

Certainly. At this time, we'll be conducting a Q and A session for media questions. Media

[Operator]

Thank you. Your next question is coming from Leslie Josephs from CNBC. Your line is live.

[Operator]

Hi, good morning everyone. Thanks for taking my question. Just curious on the segmentation at the front of the plane. Is that something that you plan to roll out in 2025 or 2026? And would it look something more like a basic business where you the customer doesn't have a seat assignment or something like that?

[Operator]

Or do you plan to have kind of a fancier or more desirable seat within Delta One or one of the other first class cabins?

[Glen Hauenstein, President at Delta Air Lines]

I think we're gonna reserve comments on that until we roll it out. I think we're testing it with customers today, and we're doing a lot of surveys. And we haven't rolled it out yet, not because we don't have the technological capability, but we wanna make sure that customers understand what we're putting in market and that they find value in it.

[Operator]

K. Could you tell us what, you're testing exactly currently?

[Glen Hauenstein, President at Delta Air Lines]

No. No. We can't. But thank you for the question.

[Operator]

Thank you. Your next question is coming from Mary Schlangenstein from Bloomberg News. Your line is live.

[Mary Schlangenstein, Correspondent Covering Airlines at Bloomberg News]

Hi. Good morning. In the last quarterly report, you said you were gonna just add an incremental 10 aircraft this year. I wondered if that's still the plan or if that's changed. And for your capacity reductions later in the year, is that going to be mostly what you just talked about dropping some of those off peak time flights?

[Mary Schlangenstein, Correspondent Covering Airlines at Bloomberg News]

Or will you be parking any planes or anything like that?

[Dan Janki, EVP and CFO at Delta Air Lines]

Yes. From a fleet perspective, we expect deliveries to be around new deliveries to be around 40 aircraft, and we expect our retirements to be around 30, slightly more. So adding just about 10 aircraft or under that, so about 1% of the fleet.

[Mary Schlangenstein, Correspondent Covering Airlines at Bloomberg News]

Okay. And what about how you're going to go about cutting capacity different ways?

[Dan Janki, EVP and CFO at Delta Air Lines]

I think Glenn talked about it earlier in regards to focus has been mostly as it relates to where there's demand weakness. So domestic, particularly in the off peak and shoulder periods, we've taken the unprofitable or where the weak demand is flying out.

[Mary Schlangenstein, Correspondent Covering Airlines at Bloomberg News]

Thank you.

[Operator]

Thank you. Your next question is coming from Allison Steider from Wall Street Journal. Your line is live.

[Mary Schlangenstein, Correspondent Covering Airlines at Bloomberg News]

Hey, thanks so much. I guess I was just curious what you guys are seeing now in terms of crowding in the Sky Club, especially now that you've sort of expanded the Delta One network and and with some of the changes to to to visit limits on visit?

[Glen Hauenstein, President at Delta Air Lines]

We are continually working to eradicate the lines and crowding at Sky Clubs, whether or not that's building new and better Sky Clubs. We didn't mention, for example, that the D Sky Club last quarter in Atlanta opened up replacing 8,000 square feet with 26,000 square feet. So we have a lot of plans to continue to address the places where we are constrained. Now one of the issues with the constraint is, and particularly with the weather that's been in New York this year with thunderstorms almost every day with flights being delayed, is that you can't build a club big enough for lengthy delays. So I think we're we're trying to look at alternatives that we can use as overflow in those instances.

[Glen Hauenstein, President at Delta Air Lines]

But I think generally by structurally non IROP days, we should have almost all of our crowding issues solved in the next eighteen to twenty four months.

[Mary Schlangenstein, Correspondent Covering Airlines at Bloomberg News]

Thanks. And how is the sort of general competitive landscape for lounges changed over the last couple of years? It just seems like there's, you know, so many lounges getting built by so many different providers.

[Glen Hauenstein, President at Delta Air Lines]

Yes. And, you know, we're very proud to have an award winning portfolio and the largest portfolio in The United States. And it's very interesting to me to see carriers like Southwest say that they may need to start building clubs. So I think people have seen the value in the, in the clubs and and the value in the premiumization of Delta. And I think that's something that a lot of people are trying to emulate, but there are many, many, many years behind us.

[Operator]

Thanks.

[Dan Janki, EVP and CFO at Delta Air Lines]

Thanks,

[Dan Janki, EVP and CFO at Delta Air Lines]

Alex. Matthew, we are right on time. So that will wrap us up.

[Operator]

Thank you. That concludes today's conference. Thank you all for your participation today.

Participants

Executives

• Julie Stewart, VP - IR & Corporate Development
• Ed Bastian, CEO
• Glen Hauenstein, President
• Dan Janki, EVP and CFO

Analysts

• Ravi Shanker, Analyst at Morgan Stanley
• Jamie Baker, Managing Director at JP Morgan
• David Vernon, MD & Senior Analyst at Bernstein
• Thomas Fitzgerald, Senior Hotels And Online Travel Analyst at TD Cowen
• Andrew Didora, Senior Equity Research Analyst at Bank of America Merrill Lynch
• Conor Cunningham, Director – Travel & Transports Research at Melius Research LLC
• Duane Pfennigwerth, Senior MD - Equity Research at Evercore
• Catherine O'Brien, Vice President at Goldman Sachs
• Michael Linenberg, Analyst at Deutsche Bank
• Sheila Kahyaoglu, Aerospace & Defense and Airlines Equity Research at Jefferies Financial Group
• Steve Trent, Managing Director at Citi
• Savanthi Syth, Managing Director at Raymond James Financial
• Mary Schlangenstein, Correspondent Covering Airlines at Bloomberg News