Delta Air Lines (DAL) Q2 FY26 earnings call: guidance and Q&A

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

Given the secular decline of low-cost carriers, what gives Delta confidence that industry fare increases will hold, and that low-cost carriers won't undermine pricing if fuel prices moderate?

Ed Bastian stated that the industry landscape has structurally changed, with low-cost carriers no longer having competitive advantages like fuel hedges or lower costs. High costs across the board necessitate pricing discipline. Delta's diversified revenue streams and focus on value/experience, not just price, make its model resilient. He estimates the low end of the market still needs to increase fares by 5% to breakeven at current fuel prices.

“The low end of the market still has to increase fares by another 5% by our estimate, just to get to breakeven at a fuel environment.”

asked by Michael Linenberg · answered by Ed Bastian

What is the capacity outlook for Q4 and early FY27, where will capacity be added, and how do new aircraft deliveries (like MAX 10) impact the structural environment?

Ed Bastian expects Q4 capacity to return to a normalized 2-3% growth rate, primarily through upgauging and international expansion (Asia, Middle East). He noted that aircraft availability is a significant constraint due to production issues and engine durability. The MAX 10 delivery next year will enable replacement of older narrowbodies.

“The growth that we're seeing here for the back end of the year going into the next couple of years will largely be in 2 areas. They'll first of all, obviously be focused on profitable growth, but it'll be upgauging... And secondly, international.”

asked by David Vernon · answered by Ed Bastian

Given that international bookings are typically made further in advance, should we expect better sequential improvement in international unit revenue in Q3 compared to Q2, and what are the trends across international geographies?

Daniel Janki confirmed that long-haul international has a longer booking curve, so Q3 should see sequential improvements as new, higher-priced revenue flows through. Transatlantic demand is strong, with a shift to U.S. point of sale. Pacific is growing with capacity, and Latin America is mixed, with strong South America but weaker Mexico/short-haul.

“Typically, your long-haul international has about 15 points of bookings more than domestic does. So when you were in March, April was very much booked and customers booked their travel, especially transatlantic for the summer.”

asked by Andrew Didora · answered by Daniel Janki

What is Delta's internal assessment of potential peak pretax margins, and what gives confidence that the current positive inflection is sustainable beyond this year?

Ed Bastian stated that Delta is not yet at peak margins, reiterating the mid-teens long-term target. He emphasized the sustainability comes from structural changes in the industry (pricing discipline due to high costs), Delta's focus on value/experience over price, fleet efficiency through upgauging, and the strong American Express partnership. He also highlighted the potential for AI to drive efficiency.

“I don't think we're anywhere close to where we will eventually stabilize that. And even when we get to stable, there's always going to be a next beyond that.”

asked by Jamie Baker · answered by Ed Bastian

How much of the double-digit corporate sales growth is from fare vs. volume, and could main cabin RASM outperform premium in Q3 given capacity cuts and low-cost carrier dynamics?

Daniel Janki clarified that most of the 20% corporate sales growth was from fare increases, with some volume improvement, especially internationally. He confirmed that in Q2, main cabin unit revenue *did* exceed premium due to capacity reductions and the healthier low-cost carrier segment. Delta is not growing main cabin seats and is balancing premium and main cabin.

“In the second quarter, our unit revenue in main cabin did exceed premium because we are down in capacity. And the industry has removed significant amount of unprofitable capacity.”

asked by Catherine O'Brien · answered by Daniel Janki