To The Moon

$Delta Air Lines(DAL)$ $United Airlines(UAL)$ $American Airlines(AAL)$ I’m watching Delta Air Lines ignite the tape with one of the cleanest earnings beats of the season. Wall Street expected strength; Delta delivered dominance. This isn’t just another airline quarter; it’s a display of strategic precision, operational discipline, and premiumisation at scale.

WE FLY ✈️ HIGH, NO LIE!

Delta delivered a textbook triple beat.

• Revenue surged to $16.67B (+6% YoY) versus $15.04B projected.

• EPS landed at $1.71 (+14% YoY) versus $1.54 projected.

• Net income rose 11% YoY to $1.42B.

• Non-fuel unit costs held essentially flat at +0.3% YoY; an exceptional achievement in today’s inflationary backdrop.

• Record revenue and stronger free cash flow supported a tighter, higher full-year EPS outlook.

The tape reacted fast. Shares jumped 7.5% pre-market before settling into a 5% post-earnings surge. Call traders swarmed with 81K contracts traded; eight times the normal volume; concentrated on the November 65 strike. Options activity is in the 100th percentile of the annual range. Price action bounced cleanly off the 80DMA and reclaimed mid-Keltner territory. With an SVS score of 85, Delta typically outperforms volatility expectations after earnings; today’s move fits that pattern.

Premium Engine, Cost Control, and Corporate Rebound

🟢 Premiumisation Engine: Premium Products revenue rose 9% YoY while Main Cabin fell 4%. Together with Loyalty and MRO, these high-margin streams now account for roughly 60% of total revenue; they are shielding results from economy softness and compounding earnings quality. American Express remuneration advanced 12% YoY to $2.0B; loyalty economics remain a powerhouse.

🟢 Cost Discipline: Non-fuel CASM staying flat expanded margins to roughly 11.2% and supported EPS growth. Delta has paid down nearly $2B of debt year-to-date; gross leverage sits at a healthy 2.4×. Balance sheet actions included repricing the SkyMiles term loan; interest cost fell by 225 bps. Fitch revised the credit outlook to “positive.”

🟢 Corporate Travel Rebound: Corporate revenue climbed 8% YoY; September accelerated to +9%. Corporate revenue has returned to pre-pandemic levels; passenger volumes are still only in the high-70s versus 2019, which implies runway. This is not just an easy comp; it is a cyclical tailwind returning.

International Strategy and Domestic Resilience

🟡 International Performance and Strategy: The Pacific grew 3% while the Atlantic declined 2% and Latin America fell 3% in Q3. Management guides to meaningful Transatlantic improvement in Q4. Strategy has shifted to build the Transatlantic book earlier for summer 2026; capacity growth will be concentrated in shoulder seasons; peak July or August is expected to see very low single-digit capacity growth if any. Delta will not use narrowbodies on Transatlantic routes; this protects brand and product standards.

🟢 Domestic Turnaround Drivers: Unit revenues in domestic markets turned positive earlier than expected. Two factors matter: Delta’s exposure to higher-income consumers; a rational competitive environment with competitor capacity down year-over-year in Delta hubs.

Market Structure and Guidance

Delta is executing flawlessly on controllables while riding secular bifurcation in U.S. airlines. Management expects Delta alone to generate about 60% of total U.S. airline industry profits this quarter; United likely accounts for most of the remainder. Premium revenue is set to overtake Main Cabin revenue as soon as a quarter or two into 2026; a pull-forward from the prior 2027 target.

Q4 guidance implies 2–4% revenue growth YoY; operating margin of 10.5–12%; raised full-year EPS guidance to approximately $6, tightened from $5.25–$6.25. Free cash flow guidance increased to $3.5–$4.0B. Government shutdown impact is estimated at less than $1M per day; smaller than prior episodes given a softer DCA backdrop. Looking to Q1 2026, management characterised demand as very strong and quite robust.

🔎 Booking Curve Watchpoint: Booking curve commentary was absent this quarter; last quarter it was flagged as a visibility risk. The omission is notable and should be clarified on the call.

Bull and Bear Case Dynamics

🐂 Bull View: Premium and loyalty are compounding; cost control is exceptional; corporate demand is broadening; balance sheet is improving; guidance is confident; options positioning confirms institutional interest.

🐻 Bear Watchpoints: Main Cabin softness persists at −4% YoY; Atlantic and Latin America were weaker in Q3; booking-curve transparency needs confirmation; macro or fuel shocks could test unit economics.

Key Chart Levels

🔵 Support: 56.80 recent low; 58.00 80DMA

🟡 Pivot: 60–62 mid-Keltner reclaim

🟢 Resistance: 65 options target; 67.50 January highs

A decisive break above 62 would align with the concentrated November 65 call positioning and opens a runway toward 65+ where momentum traders are already building exposure.

✅ 💥 Call Surge Ignites Momentum Behind the Print

Huge options surge behind $DAL following its triple beat. 81K calls have already traded today, eight times the normal volume, putting activity in the 100th percentile of its annual range. The focus is squarely on the November 65 calls. Shares jumped 7.5% pre-market and ripped 5% after the print, bouncing cleanly off the 80DMA. With an SVS score of 85, Delta typically outperforms volatility expectations post-earnings, and the tape is already confirming it.

👉❓

• Main Cabin remains the open flank; beyond capacity adjustments, which commercial levers are you deploying to reignite demand and when do you expect this segment to turn positive?

• You guide to meaningful Transatlantic unit revenue improvement in Q4; can you quantify the uplift and identify the drivers that give you confidence?

• Which business sectors are leading the corporate rebound; how much of this strength is embedded in Q4 and early 2026 guidance?

• With non-fuel CASM flat this year, what is a realistic 2026 trajectory given labour and maintenance pressures; can Delta sustain industry-leading cost performance?

• With leverage targets reached and the SkyMiles loan repriced, how quickly will capital allocation pivot toward buybacks; what is the framework for scale and timing?

The Core Thesis

Delta isn’t merely riding a recovery; it is rewriting the industry’s competitive script. Premium is surging; costs are locked down; corporate travel is accelerating; international is being repositioned with discipline. The options market is not guessing; it is positioning with size.

This isn’t a trade on turbulence; it is a thesis on dominance.

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Trade like a boss! Happy trading ahead, Cheers, BC 📈🚀🍀🍀🍀

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