What Delta Air Lines (DAL) Said on Its Q3 Earnings Call

Key Points

• Strong third-quarter performance: Delta reported $17.6 billion in revenue, up 16% year over year, and $1.5 billion in pre-tax profit despite $1.6 billion in additional fuel costs. Premium travel, loyalty, corporate demand and international operations drove growth.
• Positive near-term outlook: Management expects approximately 20% revenue growth in the fourth quarter on roughly 3% capacity growth, supported by strong forward bookings and continued corporate-travel demand.
• Fuel and balance-sheet pressures remain: Delta expects its full-year fuel bill to rise about 60% to $6 billion, while non-fuel unit costs also increased. The airline plans to generate about $2.5 billion in free cash flow and use more than $2 billion for debt reduction.

Delta Air Lines NYSE: DAL reported September-quarter revenue growth of 16% and pre-tax profit of $1.5 billion, matching the prior-year period despite absorbing $1.6 billion in higher fuel costs, executives said on the company’s 2026 earnings call.

The airline earned $1.72 per share and posted a 9.4% operating margin during the quarter. Chief Executive Officer Ed Bastian said Delta generated $1.9 billion in free cash flow year to date and delivered return on invested capital of 11%, above its cost of capital.

“Our results demonstrate the structural durability that we have built,” Bastian said, pointing to disciplined capital allocation, a diversified revenue base and investments in operations, customer experience and loyalty.

Revenue Growth Led by Premium, Loyalty and Corporate Demand

Chief Commercial Officer Joe Esposito said quarterly revenue reached $17.6 billion, up about 16% from a year earlier on flat capacity. Total unit revenue increased 15.4%, accelerating by three percentage points from the June quarter.

Domestic unit revenue rose 16%, supported by higher yields and load factors that were one point above last year. International unit revenue increased 12%, including 22% growth in Latin America. Transatlantic unit revenue growth accelerated sequentially to 11%.

Delta said corporate sales increased by double digits across sectors, cabins, hubs and entities. The week after Labor Day was the carrier’s highest corporate-sales week on record, according to Esposito.

Diversified revenue streams accounted for 61% of total revenue, with premium and loyalty revenue each growing nearly 20%. Cargo and maintenance, repair and overhaul, or MRO, revenue each rose nearly 30%.

• Premium capacity increased 6% to 7%, while premium load factors rose nearly two points.
• SkyMiles membership grew faster than capacity, the company said.
• Card acquisitions and spending both grew by double digits.
• Delta expects a fifth consecutive year of 1 million new American Express card acquisitions.

Bastian said the Delta American Express partnership is expected to produce more than $9 billion of remuneration this year, on a path toward $10 billion. The company also highlighted a recently announced strategic relationship with Hyatt, which is expected to launch later this year.

Fourth-Quarter Outlook Calls for Continued Momentum

Delta expects approximately 20% year-over-year revenue growth in the December quarter on roughly 3% capacity growth. Esposito said forward cash sales grew nearly 20% during the September quarter, the highest quarterly growth rate since 2022, and that the carrier was already more than 60% booked for the fourth quarter.

The company said seat growth is expected to remain below 2% in the fourth quarter, including a year-over-year reduction in Main Cabin seats. Delta expects that capacity positioning to support another sequential improvement in unit-revenue growth.

Management also said early first-quarter booking indicators were similar to the fourth-quarter trend. Esposito said the company has visibility into the next 90 to 120 days and sees continued strength in corporate travel and broader demand.

For the full year, Delta forecast pre-tax profit of roughly $4.5 billion, earnings of $5.10 to $5.60 per share and about $2.5 billion of free cash flow. The company expects to use more than $2 billion for debt reduction during the year.

Bastian said the outlook would put Delta’s full-year profitability close to the prior year despite an expected 60% increase, or roughly $6 billion, in its fuel bill.

Fuel, Costs and Balance Sheet Remain Key Focus Areas

Chief Financial Officer Erik Snell said Delta’s fuel price averaged $3.61 per gallon in the September quarter, including a $0.13-per-gallon refinery benefit. The company expects fourth-quarter all-in fuel prices of $4.25 per gallon, based on the forward curve as of Oct. 2, including an estimated refinery benefit of about $0.40 per gallon.

Non-fuel unit costs rose 7.3% year over year on flat capacity. Snell attributed the increase primarily to higher crew and revenue-related costs, growth that was below Delta’s original capacity plan, and the effect of weather and air-traffic-control disruptions.

For the December quarter, Delta expects non-fuel unit-cost growth to improve sequentially by one to two points. Snell said the company remains on track for low-single-digit unit-cost growth next year as capacity normalizes, operational improvements continue and higher costs enter the comparison base.

Delta ended the quarter with $13 billion of adjusted net debt and expects to finish the year with gross leverage of 2.2 times. Snell said the company had a $3 billion pension surplus and retained investment-grade ratings from all three major credit rating agencies, including a recent Fitch upgrade to BBB.

Operational Investments and Network Expansion

Chief Operating Officer Dan Janki said Delta widened its industry lead in on-time performance during the summer and delivered record baggage results despite more than twice the historical average number of disruption days from weather and air-traffic-control delays.

Delta expects further improvement in its recovery performance through the fourth quarter and into 2027. Janki said investments in crew resiliency, data, technology and operational processes are intended to improve controllable completion factor and disruption recovery.

The company also reported $1 billion in year-to-date MRO revenue, up nearly 60% from a year earlier. Janki said Delta sees an opportunity to more than double MRO revenue over the next several years while expanding margins.

On the commercial side, Delta announced service additions to the Philippines and expanded flights to Tokyo, Paris, Athens and Venice from U.S. gateways. The company is also growing its international presence from Los Angeles, including service to the South Pacific, Hong Kong and Manila.

Bastian said Delta intends to remain disciplined on capacity, particularly while fuel prices remain elevated. He said the carrier expects more of its future growth to come from international markets than domestic routes and will manage capacity with an emphasis on margins, returns and cash generation.

About Delta Air Lines (NYSE:DAL)

Delta Air Lines, Inc is a major U.S. airline that provides scheduled passenger and air freight transportation. The company serves destinations throughout the United States and connects customers to international markets across Europe, Asia, Latin America, Canada, Africa and the Caribbean through its own operations and regional airline partners.

Delta offers multiple classes of passenger service, including premium cabins and its main cabin, along with travel-related products such as vacation packages and loyalty benefits through the SkyMiles program.

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