Focusing on U.S. stocks' Q4 2025 earnings reports, Delta Air Lines (DAL) released better-than-expected fourth-quarter results early Tuesday, indicating that its business will continue to expand in 2026, fueled by growth in its premium segments and the fading of previous headwinds.
The earnings report revealed that Delta Air Lines achieved a record adjusted revenue of $14.61 billion for the fourth quarter, slightly below the Bloomberg-compiled consensus estimate of $14.67 billion, representing a year-over-year increase of 1.2%. This growth fell short of the company's previously set target of 2%, primarily due to the impact of the U.S. government shutdown.
Adjusted earnings per share for the quarter were $1.55, surpassing market expectations of $1.53. Similarly affected by the government shutdown, its EPS was reduced by $0.25.
Looking ahead, Delta Air Lines forecasts first-quarter 2026 revenue growth of 5% to 7% year-over-year, with an operating margin range of 4.5% to 6%, and adjusted EPS between $0.50 and $0.90. For the full year, the company anticipates adjusted EPS to reach $6.50 to $7.50; calculating with the midpoint implies a substantial year-over-year increase of up to 20%. Free cash flow is projected to be in the range of $3 billion to $4 billion.
The core driver of this earnings growth is the revenue boost from high-net-worth customers in premium business segments.
"Everyone is talking about a K-shaped economic environment, and our customers are positioned right at the top of that K-curve. Because of this, they are prioritizing spending on travel and seeking higher-quality travel experiences, which our premium cabins are perfectly positioned to fulfill," stated Delta Air Lines CEO Ed Bastian during an earnings call. He further added that all future additional seating capacity would be allocated to premium cabins, with no expansion planned for economy class.
A K-shaped economy refers to a bifurcated recovery where high-income groups or advantaged sectors experience continued growth and benefit, while low-income groups or disadvantaged sectors face stagnation or decline.
Bastian noted that the company has started 2026 with "strong momentum," driven by robust travel demand from both leisure and corporate customers, leading to an acceleration in revenue growth.
He also pointed out that Delta Air Lines does not expect to face the same headwinds encountered in 2025, such as the economic impact of "Liberation Day tariffs" and the negative effects of the government shutdown on the airline industry.
"In 2025, amidst a complex and challenging market environment, we achieved $5 billion in pre-tax income, a double-digit operating margin, and record free cash flow of $4.6 billion," Bastian stated.
The closely watched total revenue per available seat mile (TRASM) metric, on an adjusted basis, was $20.02 for the fourth quarter, showing a slight decrease of 0.1% compared to the prior year. Delta attributed this figure also to the drag from the government shutdown event.
The company's international business continued its strong performance, with fourth-quarter revenue increasing 5% year-over-year, as transatlantic and transpacific routes served as the primary growth engines. Delta revealed that 90% of its corporate clients—who typically have substantial international travel needs—expect their travel frequency in 2026 to remain stable or increase.
As a significant business segment for Delta and other premium airlines, American Express co-brand card commission revenue grew 11% in 2025 to reach $8.2 billion, driven by increased spending on co-branded products like the Delta SkyMiles® Reserve American Express Card. Bastian projected this revenue stream would achieve "high single-digit" growth in 2026.
He explicitly stated that the growth potential of the co-brand credit card business has an "extremely high ceiling."
"Continuously rising spending volumes and an expanding traveler base indicate that American Express cardholders, as a premium credit card brand, are willing to choose Delta co-brand cards for their spending because they want to invest their miles, time, and loyalty into our travel services," Bastian explained.
Bastian further added, "We don't see a ceiling for the growth of this business," and anticipates that co-brand card commission revenue will surpass $10 billion in the coming years.
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