It has been about a month since the last earnings report for Delta Air Lines (DAL). Shares have added about 4.3% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Delta due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Earnings Beat at Delta in Q4
Delta 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.
Other Details of DAL’s Q4 Results
Passenger revenues, which accounted for 80.7% of total revenues, increased 1% year over year at $12.91 billion. Domestic passenger revenues were flat year over year, hurt by the government shutdown. International performance improved significantly on a sequential basis, driven by the transatlantic and Pacific segments. Corporate sales improved across all sectors.
Cargo revenues declined 1% year over year to $246 million. Other revenues jumped 14% to $2.84 billion. Adjusted operating margin was 10.1% in the fourth quarter of 2025 compared with 12% a year ago.
Below, we present all figures (in percentage terms) in comparison with the fourth-quarter 2024 results.
Revenue passenger miles (a measure of air traffic) inched down 1% to 59.86 billion. Capacity (measured in available seat miles) expanded 1.3% to 72.9 billion. The load factor (percentage of seats filled by passengers) decreased 200 basis points to 82%, just below our estimate of 84%.
Passenger revenue per available seat mile remained flat at 17.71 cents. Passenger mile yield inched up 2% to 21.58 cents. On an adjusted basis, total revenue per available seat mile inched down 0.1% to 20.02 cents.
Total operating expenses, including special items, increased 5% to $14.5 billion. Salaries and related costs rose 11% to $4.6 billion. This increase was due to higher wages stemming from the contract with pilots that was ratified in 2023. Fuel gallons consumed jumped 2% to $1.04 billion. Average fuel price per gallon (adjusted) fell 3% to $2.28. Non-fuel unit cost (adjusted or CASM-Ex) inched up 4% to 14.27 cents.
DAL exited the fourth quarter of 2025 with cash and cash equivalents of $4.3 billion compared with $3.07 billion at the end of the fourth quarter of 2024. The company had an adjusted net debt of $14.3 billion at the end of the December quarter, a reduction of $3.7 billion from the 2024-end. Adjusted operating cash flow in the December quarter was $2.2 billion, with gross capital expenditures and free cash flow of $877 million and $1.8 billion, respectively.
DAL Issues Q1 EPS Guidance
Delta expects first-quarter 2026 adjusted earnings per share in the 50-90 cents band. The adjusted operating margin is expected in the 4.5-6% band. With air-travel demand stabilizing, revenues on an adjusted basis are expected to increase in the 5-7% band from the first quarter of 2025 level.
DAL’s FY26 Earnings Guidance
The company expects full-year earnings in the $6.5-$7.5 per share range. The current earnings guidance implies 20% year-over-year growth for the current year. DAL expects free cash flow for 2026 to be in the $3-$4 billion band. Long-term targets are in the $3-$5 billion band.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Delta has a subpar Growth Score of D, a score with the same score on the momentum front. However, the stock has a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Delta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Delta Air Lines, Inc. (DAL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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