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    DAL
    Earnings call· Jun 2026(Q2 FY26)

    DELTA AIR LINES Q2 FY26 earnings call DAL

    Jul 10, 2026 Source

    Executive summary

    Delta Air Lines Q2 FY26 — Record Revenue and Strong Profitability

    Delta Air Lines reported strong Q2 FY26 results with record revenue and profitability, driven by sustained demand and diversified business momentum. The company affirmed its full-year earnings and free cash flow guidance despite significant fuel headwinds, demonstrating resilience and strategic execution. Investments in customer experience, technology, and employee compensation continue to strengthen its competitive position and support long-term margin expansion.

    Highlights

    7

    • Record revenue of $17.7 billion, up 14% YoY, exceeding guidance.

    • Pretax profits of $1.4 billion and EPS of $1.56, better than guidance.

    • Operating margin of 9%, exceeding guidance.

    • Generated $1.4 billion of free cash flow in H1 FY26, fortifying investment-grade balance sheet.

    • Announced a 15% increase to the dividend.

    • Delta American Express partnership expected to generate $9 billion in remuneration this year, up 10% over 2025.

    • MRO revenue on track for $1.2 billion this year, up nearly 50% from last year, with low double-digit margins.

    Concerns

    3

    • Total fuel expense was $4.4 billion, up nearly $2 billion versus last year, with fuel price per gallon averaging $3.93.

    • Nonfuel unit costs increased 6.8% over prior year in Q2, reflecting higher crew and revenue-related costs.

    • Refinery outage caused a $0.05 hit to Q2 fuel price and is expected to be a $0.05 to $0.07 hit in Q3.

    Guidance & targets

    26
    CategoryTargetConfidence
    Operating margin
    Double-digit
    high materiality
    High
    Full-year Adjusted EPS
    $6.50 to $7.50 per share
    high materiality
    High
    Full-year Free Cash Flow
    $3 billion to $4 billion
    high materiality
    High
    Long-term Operating Margin
    Mid-teens
    high materiality
    High
    Long-term Return on Invested Capital
    Mid-teens
    high materiality
    High
    Q3 Revenue Growth
    Mid-teens
    medium materiality
    High
    Q3 Capacity Growth (ASMs)
    Up 1%
    medium materiality
    High
    Q4 Capacity Growth (ASMs)
    2% to 3%
    medium materiality
    High
    Refinery Profitability
    One of its most profitable years
    low materiality
    Medium
    Q3 Nonfuel Unit Cost (CASM-ex)
    Improve modestly
    medium materiality
    Medium
    Q4 Nonfuel Unit Cost (CASM-ex)
    Further progress
    medium materiality
    Medium
    Long-term Nonfuel Unit Cost Growth
    Low single-digit
    high materiality
    High
    Q3 All-in Fuel Price
    Approximately $3.15 per gallon
    high materiality
    High
    Q3 Total Fuel Expense Growth
    About 40% higher than last year
    high materiality
    High
    Q3 Operating Margin
    11% to 13%
    high materiality
    High
    Q3 EPS
    $2 to $2.50
    high materiality
    High
    Amex Remuneration
    $9 billion
    medium materiality
    High
    MRO Revenue
    Approximately $1.2 billion
    medium materiality
    High
    MRO Margins
    Low double-digit
    medium materiality
    High
    MRO Revenue Growth
    More than double
    medium materiality
    High
    MRO Margin Expansion
    Expanding margins
    medium materiality
    High
    Gross Leverage Ratio
    2x
    high materiality
    High
    Long-term Gross Leverage Ratio
    1x
    high materiality
    High
    MAX 10 Delivery
    In Delta colors next year
    medium materiality
    High
    New Amex Card Acquisitions
    Another 1 million cards
    low materiality
    High
    MRO Margin Expansion Rate
    About a couple of hundred basis points a year
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Domestic
    Led unit revenue growth, driven by higher yield. Main cabin unit revenue grew mid-teens in June. Corporate sales across all sectors posted double-digit growth, with core and coastal hubs up >20%.
    		—12.4% (unit revenue)——
    International
    Led by Latin America. Long-haul international has a longer booking curve. Transatlantic demand strong, shifting to U.S. point of sale. Pacific unit revenues up 8% on similar capacity. Latin America mixed: South America very strong, Mexico/short-haul weaker. Capacity down 7% in Latin America, mostly short-haul.
    		—8%——
    Cargo
    Q2 growth primarily on volume, rerouting of cargo, and structural improvements. Asia is a key growth market. Expected to show strength throughout the year, though not at 39%.
    		$1.2 billion (FY26 guidance)39% (Q2)——
    MRO (Maintenance, Repair, and Overhaul)
    Driven by legacy engine platforms. On track to generate $1.2 billion revenue this year, up nearly 50% from last year, with low double-digit margins. Expects to more than double MRO revenue and expand margins over next several years.
    Revenue growth: nearly 50% (FY26 vs FY25)Margin expansion: ~200 bps/yearBacklog: record level
    		$1.2 billion (FY26 guidance)More than 30% (Q2)—Low double-digit (FY26 guidance)

    Operational metrics

    21
    Return on Invested Capital
    11%
    Q2 FY26

    Well above our cost of capital.

    Profit Sharing Accrual
    Nearly $500 million
    H1 FY26

    Towards next year's profit sharing payout.

    Employee Pay Increase
    4%
    May

    Announced in May.

    Amex Card Spend Growth
    Double digits
    Past 7 quarters

    With particular strength among premium reserve cardholders.

    Airfares vs. Overall Inflation
    10 to 15 points below
    Since COVID

    Even after recent fare increases, airfares remain 10 to 15 points below overall inflation since COVID.

    Delta One Lounge Network Locations
    5 locations
    Current

    Opened second Delta One Lounge at LAX, expanding the industry's largest cloud and lounge footprint.

    AI-powered Digital Assistant Rollout
    More than half
    Current

    Available to more than half of Fly Delta app users, with a full rollout later this month.

    NPS Improvement (Irregular Operations)
    More than 25-point
    Current

    Driven by proactive communication and enhanced digital tools.

    Total Unit Revenue Growth
    12.4%Up 14% YoY on ~1% capacity growth
    Q2 FY26
    Diverse Revenue Streams as % of Total Revenue
    61%Up 2 points over last year
    Q2 FY26
    Premium and Loyalty Revenue Growth
    Nearly 20%
    Q2 FY26
    Fuel Expense
    $4.4 billionUp nearly $2 billion versus last year
    Q2 FY26
    Fuel Price per Gallon
    $3.93
    Q2 FY26
    Nonfuel Unit Costs (CASM-ex) Growth
    6.8%
    Q2 FY26

    Reflecting higher crew and revenue-related costs on capacity growth several points below initial plan.

    Adjusted Net Debt
    $13.6 billionDown from year-end
    End of Q2 FY26
    Refinery Throughput (post-outage)
    Approximately 75%
    Current

    Of the product that goes through the refinery.

    Refinery Outage Impact
    $0.05 to $0.07
    Q3 FY26

    Still expect a $0.05 benefit in Q3 net of this.

    Main Cabin Unit Revenue Growth
    Exceeded premium
    Q2 FY26

    Because we are down in capacity.

    Ultra LCC Capacity Reduction
    About 30%
    Current year

    Main cabin has gotten significantly healthier this year.

    Premium Revenue Growth
    17%
    Q2 FY26
    Main Cabin Capacity
    Down 2% to 3%
    Q2 FY26

    Not growing main cabin seats this year or next.

    Industry KPIs

    8
    MetricValueDetails
    Fuel$3.93USD/gallon
    Casm ex6.8%%
    Capacity1%%
    Fleet mro$1.2 billionUSD
    Unit revenue12.4%%
    Loyalty co brand$9 billionUSD
    Demand indicatorsDouble-digit growth%
    Premium diverse revenue mix61%%

    Product announcements

    5
    ProductTypeDetails
    Delta One Lounge at LAXexpansion
    Delta Conciergemilestone
    Fast Free WiFiupdate
    Amazon Leolaunch
    Basic, Classic, and Extra offeringsexpansion

    Deals & partnerships

    3
    American ExpressCo-brand credit card partnership$9 billion (expected remuneration FY26)Long-standing, multi-year

    A strategic partnership driving significant revenue and loyalty, with aligned vision and complementary strengths. It's the #1 partner for both companies.

    LATAMJoint Venture

    Partnership is in early stages of development, leveraging LATAM's hubs in Lima, Santiago, Sao Paulo, Bogota to expand in South America.

    Korean AirJoint Venture

    Great anchor partner in Asia, foundational to profitability and strategy in the region.

    Capital programs

    1
    MAX 10 Deliveryunderway

    Benefit: Enable release of some older narrowbodies (717s and 757s) as replacement.

    Looking forward to getting the MAX 10, expected in Delta colors next year, which will be a replacement for older narrowbodies.

    Risks & headwinds

    5
    High Fuel CostsQ2 FY26, ongoing

    Total fuel expense $4.4 billion in Q2, up nearly $2 billion YoY. Fuel price per gallon averaged $3.93. Fuel today is 50% higher than where we started the year.

    Mitigation: Recapturing fuel cost inflation at fastest pace of any recent cycle through revenue momentum and pricing discipline. Refinery provides offset in high crack environment.

    Refinery OutageQ2 FY26, Q3 FY26

    $0.05 hit to Q2 fuel price. Expected $0.05 to $0.07 hit on Q3 fuel price.

    Mitigation: Refinery is back up to approximately 75% throughput. Still expect a $0.05 benefit in Q3 net of the outage impact.

    Elevated Nonfuel Unit CostsQ2 FY26

    Increased 6.8% over prior year in Q2.

    Mitigation: Expect modest improvement in Q3 and Q4, aiming for low single-digit unit cost growth long-term through operational investments and normalized capacity growth.

    Aircraft Availability and Engine DurabilityOngoing, next couple of years

    Not quantified, but noted as a major industry-wide issue.

    Mitigation: Focus on upgauging existing fleet, leveraging new deliveries like MAX 10 for replacement rather than pure growth.

    Mexico/Short-haul Latin America WeaknessQ2 FY26, slowly recovering into Q4

    Latin capacity down 7%, mostly short-haul. Mexico softer due to incidents/violence earlier in the year.

    Mitigation: Capacity adjusted down in Latin America; will bring capacity back based on demand. Expect strong winter for leisure travel.

    Q&A highlights

    6

    How did unit revenue (TRASM) evolve through Q2, specifically April vs. June, and what gives confidence in the second half revenue outlook?

    TRASM exit rate in Q2 was significantly higher than the entry rate, driven by the fuel recapture strategy and new priced revenue flowing through the system. This, combined with strong forward cash sales and a business-oriented network in the fall, provides confidence for the H2 outlook.

    “Our exit rate on TRASM was significantly higher than our entry rate. And that goes to how the -- our fuel recapture strategy moved through the quarter.”

    asked by Conor Cunningham · answered by Daniel Janki

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 Performance Highlights

    Delta reported strong Q2 FY26 results, exceeding guidance with $17.7 billion in revenue, a 14% increase year-over-year, and a 9% operating margin. Pretax profits reached $1.4 billion, and EPS was $1.56. The company generated $1.4 billion in free cash flow in the first half of the year and announced a 15% dividend increase, reinforcing its strong financial position.

    02

    Operational Excellence and Customer Experience

    Delta maintained industry leadership in on-time performance and improved completion factor, baggage handling, and Net Promoter Scores. Investments in technology, such as Delta Concierge and predictive maintenance, alongside employee empowerment, have enhanced reliability and customer satisfaction, particularly during irregular operations.

    03

    Revenue Momentum and Diversification

    Demand remains strong and broad-based, with cash sales improving across all booking curves. Diverse revenue streams, including premium, loyalty, cargo, and MRO, now represent 61% of total revenue, up 2 points YoY. The Delta American Express partnership continues to show double-digit growth in card spend and new acquisitions, with expected remuneration of $9 billion for the year.

    04

    Cost Management and Fuel Environment

    Despite a nearly $2 billion increase in fuel expense, averaging $3.93 per gallon, Delta managed to exceed its profitability guidance. Nonfuel unit costs increased 6.8% in Q2, but the company anticipates modest improvement in Q3 and Q4, aiming for low single-digit unit cost growth long-term. The refinery provided a benefit, though impacted by a temporary outage.

    05

    Strategic Capacity and Fleet Management

    Delta is maintaining a measured approach to capacity growth, with Q3 capacity up 1% and Q4 planned for 2-3%, led by international expansion. The company plans to focus on profitable growth through upgauging its fleet and expanding in international markets, particularly Asia and the Middle East, leveraging partnerships and new aircraft deliveries like the MAX 10.

    06

    Industry Structural Changes

    Management highlighted significant structural changes in the airline industry, noting that high costs (fuel, labor, aircraft) necessitate pricing discipline. Airfares remain 10-15 points below overall inflation since COVID, suggesting room for further increases. The shift from low-cost carrier dominance to a focus on value, experience, and diversified revenue streams is seen as a durable advantage for Delta.

    AI-generated summary of the company’s earnings call. Not investment advice.