Delta Air Lines, Inc. (DAL) shares slipped roughly 5% in premarket trading Tuesday, which seems a bit harsh given the airline just beat estimates and dropped some pretty optimistic guidance. But that's the market for you.
The carrier reported fourth-quarter adjusted earnings of $1.55 per share, topping the $1.53 Wall Street estimate, while revenue climbed to $16.003 billion, comfortably above the $15.585 billion consensus forecast. GAAP operating revenue was up 3% year-over-year, with GAAP diluted earnings coming in at $1.86 per share.
Operating metrics told a familiar story for airlines these days. GAAP operating income hit $1.5 billion with a 9.2% margin, down from 11.0% a year earlier. The adjusted operating margin was 10.1%, compared with 12.0% in the prior year period. Available seat miles increased 1.3% to 72.9 billion, but revenue passenger miles actually declined 1% to 59.9 billion, pushing the load factor down to 82% from 84% a year ago.
Here's where things get interesting: The shift toward premium is real and it's working. Revenue from premium products jumped 9% year-over-year, while main-cabin ticket revenue dropped 7%. Delta is basically betting that fewer people crammed into economy and more people enjoying the front of the plane equals better margins. So far, that bet is paying off.
Passenger revenue rose a modest 1% to $12.916 billion, cargo revenue slipped 1% to $246 million, and other revenue climbed 14% to $2.841 billion. Total revenue per available seat mile came in at 21.94 cents, with adjusted TRASM at 20.02 cents. Non-fuel CASM-Ex increased 4.0% to 14.27 cents, and the adjusted fuel price was $2.28 per gallon.
Delta noted that December-quarter revenue growth took about a 2-point hit from the government shutdown, primarily affecting the domestic segment. Without that disruption, the numbers would have looked even better.
The Full-Year Picture
For all of 2025, Delta reported GAAP operating revenue of $63.364 billion and GAAP diluted earnings of $7.66 per share, with adjusted diluted earnings of $5.82. The airline generated operating cash flow of $8.342 billion and record free cash flow of $4.643 billion. The balance sheet showed cash and cash equivalents of $4.310 billion, total cash including restricted cash of $4.501 billion, and total debt and finance lease obligations of $14.113 billion.
CEO Ed Bastian struck an upbeat tone, saying, "We generated $5 billion of pre-tax profit with a double-digit operating margin and record free cash flow of $4.6 billion, all while navigating a challenging environment." He added, "2026 is off to a strong start with top-line growth accelerating on consumer and corporate demand. For the full year, we expect to deliver margin expansion and earnings growth of 20% year-over-year."
President Glen Hauenstein emphasized Delta's premium positioning: "Delta generated record revenue of $58.3 billion while sustaining a unit revenue premium relative to the industry of nearly 115%. High-margin, diversified revenue streams grew high-single digits over prior year and reached 60% of total revenue, reflecting the power of Delta's brand, growing demand for our premium products and the success of our integrated commercial and customer strategy."
He continued: "Since the start of this year, cash sales trends have accelerated on top of last year's strong performance, with momentum across the booking curve and all geographies. We expect March quarter revenue to grow 5% to 7% year-over-year, several points ahead of capacity growth."
Looking Ahead
The carrier's March-quarter guidance calls for an operating margin of 4.5% to 6%. Delta expects first-quarter adjusted earnings of 50 cents to 90 cents per share, compared with the consensus estimate of 70 cents, while projecting revenue of $14.74 billion to $15.02 billion, well above the Street's $13.63 billion estimate.
The real headline is the full-year 2026 outlook. Delta projects earnings of $6.50 to $7.50 per share, significantly above the Street's $5.79 estimate, alongside free cash flow of $3 billion to $4 billion. That's a bold statement of confidence.