ii view: premium demand drives Delta Air Lines rally

With a history stretching back almost 100 years, we assess prospects for this giant of the global airline industry.

9th October 2025 15:37

by Keith Bowman from interactive investor

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Third-quarter results to 30 September  

  • Adjusted revenue up 4.1% at $15.2 billion
  • Adjusted earnings up 14% to $1.71 per share
  • Adjusted net debt down 17% to $15.6 billion
  • Dividend of 18.75 US cents per share, up from the prior quarter’s 15 US cents

Guidance: 

  • Expects fourth-quarter revenues to be up between 2% and 4%
  • Now expects full-year adjusted earnings of $6 per share, at the upper end of a previous $5.25-6.25 range

Chairman Glen Hauenstein said:

“Delta's competitive advantages and differentiation have never been more evident, and thanks to the hard work of our people, we continue to elevate the customer experience and extend our industry leadership.

“Looking to 2026, Delta is well positioned to deliver top-line growth, margin expansion and earnings improvement consistent with our long-term financial framework.”

ii round-up:

Delta Air Lines Inc (NYSE:DAL) today reported record third-quarter revenue, driven by higher fares and premium travel demand, with the Atlanta headquartered company also forecasting a strong finish to the year. 

Adjusted quarterly revenues to late September of $15.2 billion rose 4.1% from a year ago, fuelling a 14% rise in adjusted earnings to $1.71 per share. Analysts had been expecting outcomes of $15 billion and $1.53 per share respectively. Management’s predicted growth in fourth-quarter revenue to late December of up to 4% also exceeded current Wall Street forecasts of around 1%. 

Shares in the S&P 500 company rose 5% in early US trading having come into these latest results down by around a similar amount so far in 2025. The S&P 500 is up 15% year-to-date. Rival Southwest Airlines Co (NYSE:LUV) is down by around 3% over that time. 

Delta flies to more than 290 destinations across six continents. Premium ticket related sales climbed 9% to $5.8 billion, almost matching main cabin sales of $6 billion. Cargo revenues improved 19% to $233 million. 

Growth in domestic passenger and Pacific related revenues more than countered reduced sales for Atlantic and Latin American ticket demand.

Full-year adjusted earnings are now expected to come in at around $6 per share, toward the upper end of management’s previous $5.25-6.25 range. 

Group net debt down $2.4 billion from the start of the year to $15.6 billion leaves the airline sat on a leverage ratio of 2.4 times. 

A previously announced quarterly dividend of 18.75 US cents per share is up from the prior quarter’s 15 cents per share. 

Fourth-quarter results are likely to be announced mid-January. 

ii view:

Delta served more than 200 million customers in 2024. Employing over 100,000 people, the airline operates across nine US hubs, flying up to 5,000 peak-day flights. Domestic US flights generated its biggest slug of revenue during 2024 at 70%. That was followed by Atlantic flights at 17%, flights to Latin America at 7% and those to the Pacific region the balance of 5%.  

For investors, the outlook for US consumers remains uncertain with US trade tariffs potentially feeding into inflation and keeping interest rates high. Geopolitical tensions and the possibility of the Ukraine war spreading should not be forgotten. Airline industry emissions and climate change considerations continue to warrant consideration, while a forward price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap. 

On the upside, diversity of revenue types and geographical locations continues to assist performance. The price of oil is down around 10% during 2025, with Delta fuel costs for this latest quarter down 6% year-over-year. A recovery in passenger numbers from the pandemic has boosted cashflow, allowing a reduction of net debt and an increase in the dividend, while Delta’s fleet is navigating towards more fuel efficient and climate friendly aircraft.  

In all, and while events outside of management’s control such as the weather raise risks across the transport sector, a consensus analyst estimate of fair value in excess of $70 per share points to ongoing optimism on Wall Street. 

Positives: 

  • Diversity of geographical locations
  • High focus on costs

Negatives:

  • Heightened geopolitical tensions 
  • Many factors outside of management control

The average rating of stock market analysts:

Buy

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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