TLDR
- Delta’s Q4 adjusted EPS of $1.55 topped the $1.53 consensus but revenue of $14.61 billion fell short of expectations
- Stock declined over 5% in pre-market despite earnings beat as revenue growth disappointed investors
- 2026 guidance calls for adjusted EPS of $6.50 to $7.50, representing 20% growth year-over-year
- Premium cabin expansion continues as airline adds zero economy seats to fleet
- American Express co-branded card revenue hit $8.2 billion in 2025 with $10 billion target ahead
Delta Air Lines posted mixed fourth quarter results Tuesday, with earnings exceeding Wall Street expectations while revenue came up short. Shares dropped more than 5% in pre-market action.
The airline reported adjusted earnings per share of $1.55, surpassing the $1.53 analyst consensus. Revenue reached $14.61 billion, missing the $14.67 billion forecast by a slim margin.
The earnings figure marked a 16% decline from $1.85 per share in the prior year period. Revenue climbed 1.2% year-over-year despite headwinds.
CEO Ed Bastian pointed to a government shutdown as the culprit behind softer revenue. The shutdown knocked roughly two percentage points off revenue growth and cost $0.25 per share in earnings, mainly through weaker domestic bookings.
Full year 2025 results showed adjusted EPS of $5.82 on revenue of $58.28 billion. The company produced $4.6 billion in free cash flow and $5 billion in pre-tax profit during the year.
Wealthy Traveler Strategy Takes Center Stage
Delta is doubling down on affluent customers. The carrier revealed every single new seat being added to its fleet will be in premium cabins, with economy sections getting no expansion.
Bastian characterized the move as targeting the upper tier of a K-shaped economic recovery. “Our consumer happens to sit right at the top end of that K, and as a result of that they are investing and prioritizing spending on travel,” he noted.
The premium-first approach capitalizes on travelers willing to pay more for enhanced experiences. International operations showed strength with 5% year-over-year growth in the fourth quarter, driven by Transatlantic and Pacific routes.
Total adjusted revenue per available seat mile came in at $20.02, slipping just 0.1% versus last year. Corporate travel demand looks solid, with 90% of business clients expecting steady or increasing activity in 2026.
Credit Card Revenue Streams Higher
Delta’s American Express partnership delivered strong returns. Co-branded card remuneration grew 11% in 2025 to $8.2 billion, fueled by spending on products like the Delta Platinum Reserve card.
Bastian sees the partnership reaching $10 billion in the coming years. The company expects “high-single-digit growth” from the credit card business in 2026.
The tie-up benefits from Delta’s affluent customer base using rewards for premium travel options. “What it tells you is you have an affluent consumer, who Amex is the high-end card for, choosing to use their Delta card,” Bastian explained.
Strong Growth Projected for 2026
Delta’s 2026 guidance projects adjusted EPS between $6.50 and $7.50, up 20% at the midpoint from 2025. Free cash flow is forecast at $3 billion to $4 billion.
First quarter expectations call for revenue growth of 5% to 7% with adjusted EPS of $0.50 to $0.90. Bastian described 2026 as starting strong with accelerating demand across consumer and corporate segments.
Analysts hold a Strong Buy rating on the stock with an average price target of $81.36, suggesting 14.5% upside from current levels.
