Does Delta Air Lines' Q4 Earnings Beat Justify a Buy Decision Today?

On Jan. 13, Delta Air Lines (DAL) reported its fourth-quarter 2025 financial results, highlighting diversified revenue streams, solid international travel demand (with strength across Transatlantic and Pacific) and corporate sales growth. The popularity of Delta Air Lines’ brand, which includes rising demand for DAL’s premium products and the success of its integrated commercial and customer strategy, also acted as a tailwind. The company continued to expand its fleet, maintain best-in-class on-time performance and deliver value to shareholders through healthy profitability and dividends.

Highlights of DAL’s Q4 Earnings

Delta Air Lines reported fourth-quarter 2025 earnings (excluding 31 cents from non-recurring items) of $1.55 per share, which beat the Zacks Consensus Estimate of $1.53. Earnings decreased 16.22% on a year-over-year basis due to high labor costs.

Revenues in the December-end quarter were $16 billion, beating the Zacks Consensus Estimate of $15.63 billion and increasing 2.9% on a year-over-year basis. Adjusted operating revenues (excluding third-party refinery sales) increased 1.2% year over year to $14.6 billion. Revenue growth was impacted by about 2 points due to the government shutdown, mainly in the domestic segment, consistent with the company's disclosure last month. 

The fourth-quarter earnings beat enabled the airline to maintain its excellent earnings surprise record. DAL has surpassed the Zacks Consensus Estimate in each of the past four quarters, with an average of 7.94%.

DAL’s Fleet Expansion Efforts

As part of its fleet modernization efforts, Delta Air Lines reached an agreement withThe Boeing Company BA to acquire 30 787-10 widebody aircraft, with options to purchase an additional 30. Aircraft deliveries are expected to commence in 2031.

In addition to enhanced fuel efficiency, the new aircraft are expected to provide better operating economics and expand Delta Air Lines' long-haul capabilities. The order represents the next phase of Delta Air Lines’ international growth strategy, strengthening its global footprint and building on a solid foundation for overseas expansion supported by the airline’s industry-leading domestic network and joint-venture partnerships across all major regions. Delta Air Linesalso signed a separate agreement with GE Aerospace GE to provide maintenance services for the GEnx engines selected for the aircraft.

Apart from DAL, Alaska Airlines, a wholly owned subsidiary of Alaska Air Group (ALK), has also agreed to buy 105 new 737-10 aircraft and five new 787 aircraft from Boeing, whileextending the aircraft delivery stream through 2035. The deal also includes options for 35 additional 737-10s over the same period. This deal brings Alaska's total Boeing orderbook to 245 aircraft, along with the already operational 94 MAX aircraft. The 737-10s will be used for a mix of growth and replacement of older narrowbody aircraft, while preserving flexibility to adjust to other 737 variants if needed.

DAL’s Strong Price Performance

Shares of Delta Air Lines have performed handsomely over the past six months, outperforming the Zacks Transportation - Airline industry and the S&P 500 Index.

DAL Stock’s Six-Month Price Comparison

Headwinds Confronting DAL Stock

The uptick in total operating expenses rose 5% year over year to 14.5 billion in the fourth quarter of 2025, despite tailwinds from lower fuel and maintenance costs. It underscores mounting inflationary pressure across the cost base. Salaries and related costs rose 11% year over year to $4.59 billion. This increase was due to higher wages stemming from the contract with pilots that was ratified in 2023. Landing fees and other rents increased 14% year over year, and ancillary businesses and refinery expenses rose 20% year over year. DAL expects to continue experiencing increased cost pressure from the labor agreements. 

Average fuel price per gallon (adjusted) fell 3% year over year to $2.28. Non-fuel unit cost (adjusted or CASM-Ex) inched up 4% year over year to 14.27 cents in the fourth quarter.

Overall, the sustained uptick across essential expense categories creates a challenging cost architecture that could impede future profitability.

DAL’s Unattractive Valuation

DAL stock looks highly unattractive from a valuation standpoint. Considering the forward 12-month price-to-sales ratio (P/S-F12M), DAL has a forward 12-month P/S-F12M of 0.70X compared with 0.59X for the industry. The company’s forward 12-month P/S-F12M ratio is also above the median level of 0.53X over the past five years.

DAL P/S Ratio (Forward 12 Months) Vs. Industry

Final Thoughts

For long-term investors, a single quarter’s performance is less critical than the company’s underlying fundamentals. While Delta Air Lines delivered impressive fourth-quarter results, potential investors should exercise caution and avoid rushing to buy, given the challenges the company faces. It is advisable to monitor DAL’s progress and wait for a more favorable entry point. Existing shareholders, however, can consider maintaining their positions, as the stock’s long-term prospects remain solid. The Zacks Rank #3 (Hold) further reinforces this cautious outlook.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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