Delta Air Lines Stock Looks Ready to Fly to New Highs

Key Points

• Delta Air Lines' solid Q3 has placed its stock price on track to reach new highs.
• Outperformance and cash flow enable debt reduction, reinvestment, and capital returns, which are expected to grow robustly.
• Analyst and institutional trends suggest the highs could be reached in 2025 or early in 2026.

It's been touch-and-go for Delta Air Lines’ NYSE: DAL stock price over the past few years, but those days are coming to an end.

The company’s industry-leading position, persistent strength, outperformance, cash flow, and value-building capability have its stock price on track to reach new all-time highs, potentially before the year’s end.

Strong cash flow has allowed Delta to pay down debt, regain investment-grade credit status, and resume dividend payments—a key factor that could attract income investors as future distributions increase.

Delta’s Beat-and-Raise Quarter Strengthens the Capital Return Outlook

Delta had a strong quarter, growing its revenue by 4.2% in FQ3, outpacing MarketBeat’s reported consensus by 75 basis points on strengths in critical growth segments. The company reports domestic activity returned to growth, led by a 5% increase in passenger traffic, while all geographies contributed to the strength. Segmentally, the higher-margin premium, as well as corporate and loyalty, also grew substantially, with premium and loyalty up by 9% each. 

The margin news is also solid. The company controlled its non-fuel costs, increasing by only 0.3%, while fuel expenses are dropping more than 8% year-over-year on an adjusted basis. The net result is that adjusted earnings of $1.71 grew by 14% compared to the smaller 4.2% top-line advance, and are expected to remain strong through year-end. Likewise, forward-looking data, including the booking windows, revealed momentum at the quarter's end and is reflected in the guidance. 

Delta’s guidance is robust, given the macroeconomic headwinds and growth posted in previous years. The company lifted its full-year revenue outlook to about $6 billion, exceeding the consensus of $5.7 billion by more than 525 basis points, and its earnings forecast is equally strong. The mid-point of Q4's target range is $1.75, or more than 670 bps above MarketBeat’s reported consensus and may turn out to be cautious. 

Delta’s Dividend Increases Will Help Lift Share Prices Over Time

Delta’s dividend isn’t spectacular, but it aligns with the broad market average as of early October and is expected to grow over time. Distribution growth matters, as the company is paying approximately 10% of its earnings and earnings quality is improving, enabling it to increase payments, potentially back to pre-COVID levels. In this scenario, the company will increase distribution by more than 110% over the next two to three years, potentially catalyzing significant interest from income investors sufficient to sustain the uptrend in share prices. 

Until then, the analysts and institutional trends align with a rising DAL stock price, and the capital return outlook is among the factors that motivate them. The analysts' consensus figure entered a brief downtrend earlier in the year, which aligned with the tariff-induced fear spike and DAL market sell-off, but has since recovered, indicating new highs are likely to be set in early 2026 if not before. Regarding the institutions, they provide a solid support base, owning about 70% of the stock, and have been buying on balance all year. 

Delta Air Lines Stock Price Action Poised for Year-Ending Rally

Delta Air Lines' stock price surged more than 5% following the Q3 release and guidance update. Although the market also struggles with resistance following the release, it is poised to move higher, having confirmed robust support at a critical level, aligning with the uptrend that began in April.

The risk is that DAL will not rally quickly and that its market will continue the slow grind higher unless another catalyst emerges. Potentially, it will experience turbulence near the $64 and $68 levels, keeping it range-bound until later in the year. Possible catalysts include the end of the government shutdown, improvements in geopolitical/trade relations, and increases in dividend distributions.