Delta Air Lines (DAL) Stock: Earnings Beat Expectations But Revenue Falls Short

TLDR

• Delta posted Q4 adjusted EPS of $1.55, beating estimates of $1.53, though revenue of $14.61 billion missed expectations
• The company projects 2026 adjusted EPS of $6.50 to $7.50, representing a 20% year-over-year increase at the midpoint
• Delta is focusing on premium customers, with 100% of new seat capacity going to premium cabins and zero to economy
• American Express card remuneration grew 11% in 2025 to $8.2 billion, with projections to hit $10 billion in coming years
• Stock dropped 5-6% in pre-market trading despite the earnings beat due to revenue miss and government shutdown impacts

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Delta Air Lines reported mixed fourth quarter results on Tuesday, with earnings exceeding forecasts but revenue coming in slightly below analyst expectations. The stock fell over 5% in pre-market trading following the announcement.

The airline posted adjusted earnings per share of $1.55 for the quarter, topping the consensus estimate of $1.53. However, this marked a 16% decline from the $1.85 reported in the same quarter last year.

Revenue reached $14.61 billion for the quarter, up 1.2% year-over-year. This fell short of the $14.67 billion analysts had projected.

Delta Air Lines, Inc., DAL

Delta attributed the revenue shortfall to a government shutdown that reduced domestic travel. CEO Ed Bastian said the shutdown cost the company about two percentage points in revenue growth and $0.25 per share in earnings.

For the full year 2025, Delta generated adjusted EPS of $5.82 on sales of $58.28 billion. The company delivered $4.6 billion in free cash flow and $5 billion in pre-tax profit.

Premium Cabin Strategy Drives Growth

Delta is betting big on wealthy travelers. The airline revealed that 100% of its new seat capacity is going to premium cabins, with no additions to economy seating.

This K-shaped approach reflects an economy where affluent consumers behave differently than lower-income groups. Delta’s premium focus includes business travelers and leisure customers willing to pay more for upgraded experiences.

The strategy appears to be working. Total adjusted revenue per available seat mile came in at $20.02 for the quarter, down just 0.1% compared to last year.

International routes showed particular strength. Year-over-year growth reached 5% in the fourth quarter, led by Transatlantic and Pacific regions.

Credit Card Partnership Continues Strong Performance

Delta’s partnership with American Express remains a cash machine. Card remuneration grew 11% in 2025 to reach $8.2 billion.

Bastian said the co-branded credit card business has room to expand. He projects the remuneration could hit $10 billion within a couple of years.

The partnership benefits from Delta’s focus on premium customers. Cardholders use their rewards on the airline’s higher-end travel options.

Delta expects “high-single-digit growth” from the American Express relationship in 2026. Cards like the Delta Platinum Reserve drive spending among the airline’s target demographic.

Looking ahead to 2026, Delta projects adjusted EPS between $6.50 and $7.50. This represents a 20% increase at the midpoint compared to 2025 results.

The company forecasts free cash flow of $3 billion to $4 billion for the year. First quarter revenue is expected to grow 5% to 7%, with adjusted EPS between $0.50 and $0.90.

Bastian said 2026 started strong with accelerating demand from both consumers and corporate clients. The company noted 90% of its corporate clients expect travel to increase or remain steady this year.

Analysts remain bullish on the stock despite the pre-market drop. The consensus rating is a Strong Buy with a price target of $81.36, implying 14.5% upside from current levels.

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