DAL vs. AAL: Which Airline Stock Is a Stronger Play Now?

Delta Air Lines DAL and American Airlines AAL  are two well-known names in the Zacks Transportation- Airline industry. Delta, based in Atlanta, GA, is a founding member of the SkyTeam global airline alliance. DAL is known for its extensive domestic and international network. Delta and its alliance partners collectively serve over 150 countries and territories with nearly 1000 destinations served globally.

American Airlines, based in Fort Worth, TX, is a founding member of the oneworld global alliance. AAL is known for its extensive domestic and international network. The carrier serves over 350 destinations globally, with approximately 224 million passengers having boarded its flights in 2025.

Given this backdrop, let's examine closely to find out which airline heavyweight currently holds the edge, and more importantly, which might be the smarter investment now.

The Case for DAL

Strong international travel demand and diversified revenue streams being resilient are driving Delta’s top-line growth. Driven by its diversified revenue base, Delta reported better-than-expected earnings per share and revenues in the fourth quarter of 2025, results of which were released last month. Revenue growth was impacted by about 2 points due to the government shutdown.

The earnings beat by Delta in the December quarter enabled it to maintain the excellent earnings surprise record. Delta has outpaced the Zacks Consensus Estimate in each of the past four quarters. The average beat is 7.9%.

Delta Air Lines Price and EPS Surprise

Delta Air Lines price-eps-surprise | Delta Air Lines Quote

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 sequentially, driven by the transatlantic and Pacific segments. Corporate sales improved across all sectors. Delta expects first-quarter 2026 adjusted earnings per share in the 50-90 cents band.

Highlighting efforts to modernize its fleet, Delta reached an agreement with The 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 planes are expected to provide better operating economics and expand Delta’s long-haul capabilities. The order to Boeing represents the next phase of Delta’s 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’s shareholder-friendly approach also stands out. Highlighting its shareholder-friendly stance, DAL’s management announced a 25% hike in the quarterly dividend payout in 2025. This was the second dividend increase announced by Delta since its resumption of quarterly dividend payments following the COVID-induced hiatus. High labor costs, however, continue to dampen bottom-line growth.

The Case for AAL

While releasing its fourth-quarter 2025 results last month, AAL’s management projected a loss per share of 10 cents to 50 cents in the first quarter of 2026, hurt by high costs and the weather impact. For the full-year 2025, AAL expects adjusted earnings per share to be between $1.70 and $2.70. 

Its earnings miss in the December quarter was the first one by the carrier in the last four quarters. The airline had delivered a positive earnings surprise in the other three quarters. The four-quarter average beat is 3.5%.

AAL's financial metrics indicate that its leverage is elevated and is a massive negative for shareholders. The long-term debt burden of the company stood at $25.3 billion at the end of 2025, which translates into a debt-to-capitalization of 94.9%, which is above the industry’s 44.5%.

Increased labor costs are hurting American Airlines’ bottom line. Moreover, since trade unionism is quite robust in this industry, it is hard to keep a check on wage increases.  Salaries, wages and benefits have increased 9.6% in 2025, and as a result, AAL expects first-quarter 2026 cost per available seat miles (adjusted) to increase in the 3-5% range from first-quarter 2025 actuals.

On a brighter note, the southward movement of oil prices bodes well for AAL’s bottom-line growth. The use of AI and data analytics is a positive for American Airlines. American Airlines has been aggressively upgrading its technology focus with AI-driven systems to modernize both customer experience and operational efficiency as part of a broader digital transformation.

DAL’s Better Price Performance

Shares of DAL have gained in double digits over the past six months, outperforming its industry and American Airlines.

End Note

Stronger air travel demand, particularly in the international segment, is a significant positive for both DAL and AAL. Lower fuel costs also act as a tailwind for the two carriers.

However, unlike DAL, AAL does not provide dividends to its shareholders. Dividend-paying stocks tend to attract strong investor interest, especially during uncertain periods like the present. In such times, dividends serve as a reliable source of steady income, even though they may not deliver substantial price appreciation. Regular dividend payments can also help reduce overall portfolio volatility. Additionally, DAL’s superior price performance gives it an added advantage.

Furthermore, AAL carries a much higher debt burden compared with DAL. Considering these factors, DAL appears to be the more attractive choice at this time, even though both stocks currently carry a Zacks Rank #3 (Hold).

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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