Delta Air Lines Inc. (NYSE:DAL) reported second-quarter 2026 results on Friday that topped Wall Street estimates for adjusted earnings and revenue. However, the stock traded lower after the release.
Adjusted earnings came in at $1.56 per share, topping the $1.47 estimate, while GAAP diluted earnings fell 25% year over year to $2.44 per share.
Record Revenue, Lower Margins
Operating revenue rose 19% to $19.76 billion, topping the $17.53 billion estimate. Adjusted operating revenue increased 13.9% to a record $17.67 billion on about 1% capacity growth.
Adjusted operating income declined 24% to $1.56 billion, while the adjusted operating margin narrowed to 8.8% from 13.3%. Adjusted net income fell 26% to $1.03 billion.
Passenger revenue increased 13% to $15.61 billion. Premium-product revenue rose 17% to $6.92 billion, while main-cabin revenue grew 8% to $6.85 billion.
Domestic revenue climbed 15%, Atlantic revenue rose 8%, Latin America revenue increased 4%, and Pacific revenue advanced 15%. Adjusted unit revenue grew 12.4%, while passenger yield increased 12%.
Diversified Revenue Supports Growth
Diversified revenue streams accounted for 61% of adjusted revenue, up from 59% a year earlier. Cargo revenue rose 39%, MRO revenue increased 32%, and loyalty and related revenue grew 19%.
American Express remuneration increased 16% to $2.4 billion. Corporate sales rose by double digits across all sectors, while premium corporate sales increased more than 25%.
Fuel Costs Pressure Profitability
Adjusted operating expenses increased 20% to $16.10 billion. Non-fuel unit costs rose 6.8%.
Adjusted fuel expense surged 77% to $4.41 billion, with the adjusted fuel price rising 75% to $3.93 per gallon. Delta said it absorbed the highest quarterly fuel expense in its history.
The airline generated $1.65 billion in adjusted operating cash flow and $209 million in free cash flow during the quarter. First-half adjusted operating cash flow totaled $4.07 billion, with free cash flow of $1.44 billion.
Delta ended the quarter with $4.67 billion in cash and $7.7 billion in liquidity. Debt and finance lease obligations totaled $13.95 billion, down 7% year over year, while adjusted net debt fell by $709 million from the end of 2025 to $13.59 billion.
The company expects gross leverage of about two times by year-end and announced a 15% dividend increase beginning in the September quarter.
Delta Affirms Full-Year Outlook
Delta CEO Ed Bastian said the airline is entering the second half of the year from a position of strength and expects the momentum to continue, with double-digit operating margins and a return to earnings growth.
He added that the company reaffirmed its full-year outlook for 20% earnings growth despite facing a multibillion-dollar fuel cost headwind, underscoring the resilience of its business and setting the stage for continued momentum into 2027.
For the third quarter, Delta expects adjusted earnings of $2.00 to $2.50 per share, compared with the $1.99 estimate. It forecasts mid-teens revenue growth and an operating margin of 11% to 13%.
Delta affirmed full-year adjusted EPS guidance of $6.50 to $7.50, compared with the $5.93 estimate, and maintained free cash flow guidance of $3 billion to $4 billion.
Management expects full-year earnings to grow 20% despite a multi-billion-dollar fuel headwind, with double-digit margins and a return to earnings growth in the second half.
DAL Price Action: Delta Air Lines shares were down 0.39% at $88.65 during premarket trading on Friday, according to Benzinga Pro data.
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