Airlines · #74 in the Retail 100

Delta Air Lines

DAL

Our rating: selllow conviction
12-month target: $87.83 +5.5%
Expected vs. S&P 500: -12 ptsSee the math
Next earnings: Jan 13In 69 daysEarnings calls page ↗

Delta's 2027 rebound depends on fares rising faster than fuel, which already forced a cut to this year's forecast.

Summary

Delta is a U.S. airline built around premium seats, its loyalty program and its American Express card deal, which now bring in more than economy tickets. Fuel is this year's problem: after strikes on Iran pushed prices up, its adjusted fuel bill rose 62% last quarter. Analysts expect earnings to rebound sharply in 2027. The stock depends on fares rising faster than fuel.

$83.28

+$21.53 (+34.87%)Past year

What Delta Air Lines does

Delta flies from hubs in Atlanta, Detroit, Minneapolis and Salt Lake City. Its premium seats and American Express card deal now bring in more money than economy tickets do.⁴⁴

What it sells

Main Cabin tickets37% of revenue, FY2025
Standard economy seats, where Delta competes head-on with discount airlines like Frontier and Spirit.
Premium tickets35% of revenue, FY2025
Delta One, First Class, Premium Select and Comfort+ seats, popular with corporate travelers. New planes carry more of them.
SkyMiles and Amex12% of revenue, FY2025
American Express buys miles to reward its Delta cardholders, and members fly on miles. Amex paid Delta $8.2 billion in 2025.
Refinery sales8% of revenue, FY2025
Delta owns a refinery near Philadelphia that makes jet fuel for its planes and sells its gasoline and diesel to others.
Bags, cargo and repairs8% of revenue, FY2025
Bag fees and onboard sales, freight, and maintenance work on other airlines' planes and engines through Delta TechOps.

Who buys it

Leisure and business travelers, with corporate customers driving premium demand. Domestic routes made up 69% of 2025 ticket revenue, the Atlantic 18%, Latin America 8% and the Pacific 5%. Its growth now comes mostly from premium seats and the Amex card, not economy fares.

Where you've seen it

The Delta SkyMiles American Express card, and the Delta Sky Club lounge access that comes with some Amex cards.

The backstory

Delta spent years shifting toward premium seats and its card deal: revenue other than Main Cabin tickets was 61% of adjusted revenue in the September quarter. The 2026 problem is fuel. After strikes on Iran in late February, Delta's fuel bill rose $1.6B in the September quarter and is expected to rise $6B for the year. Its answer has been higher fares, slower growth and its refinery.

How the business makes money

Why Delta's profit leans on premium seats and Amex^{1,2,3,4,5,8,9,10,14,37,39}

Step 1
Business travelers pay more for Delta's brand, and it keeps adding premium seats. Premium ticket sales rose 18% last quarter.
Step 2
American Express buys miles to reward Delta cardholders. It paid Delta $8.2 billion in 2025, cash that fuel prices can't touch.
Step 3
Fuel is the big swing cost. Strikes on Iran pushed Delta's fuel bill up $1.6B last quarter, and its own refinery offsets only part.
Step 4
Delta flies less than planned to keep fares up. It still earned $1.5B before tax last quarter.
What shareholders get
Cash goes first to paying down debt, over $2B this year. The stock is betting fares rise faster than fuel.

Advantages

Its American Express card deal

Major advantage

Delta's biggest advantage, and fuel prices can't touch it. American Express paid Delta $8.2B in 2025. The card has added more than 1 million new holders for four straight years.^3,8

A premium brand that business travelers pay more for

Strong advantage

A real pricing advantage. Delta says its revenue per seat mile was nearly 115% of the industry's in 2025. Corporate sales grew by double digits in every sector last quarter.^3,37

Its own refinery

Supporting

Helpful, but small next to a $4.4B quarterly fuel bill. Delta bought the refinery in 2012 for $150M.^2,9,37,39

What's changing

Delta cut its 2026 forecast as fuel climbed

U.S. and Israeli strikes on Iran in late February disrupted the Strait of Hormuz and pushed fuel prices up. On October 9 Delta cut its 2026 forecast from $6.50 to $7.50 a share. Fuel, it said, cost over $500M more than its July outlook assumed. It guided the December quarter to $1.15 to $1.65 a share.^14,37,39,41

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with Delta Air Lines
Delta Air Linesthis stock	$54.80B	Delta flies from hubs in Atlanta, Detroit, Minneapolis and Salt Lake City. Its premium seats and American Express card deal now bring in more money than economy tickets do.
United AirlinesUAL	$32.72B	Big hub airline built on premium cabins and long international routes, much like Delta.	United copies Delta's premium playbook; Delta leans more on its Amex card deal.¹⁵
American Airlines GroupAAL	$8.08B	Large hub airline with fewer premium customers, still carrying heavy debt.	American sells more cheap seats; Delta earns more per seat from premium and Amex.^16,1
Southwest AirlinesLUV	$20.98B	Low-fare airline flying point to point, only now adding assigned and premium seats.	Southwest competes on cheap fares; Delta charges more for premium seats and loyalty.¹²

Leadership

Who runs the company, and how the stock has done under the CEO.

DAL +125%S&P 500 +329.1%Total return with dividends since May 2016

20172019202120232025

Ed BastianCEO10 yrs

Erik SnellEVP and CFO7 mo

Peter CarterPresident7 mo

Dan JankiCOO7 mo

When Bastian was named (Feb 2016), the stock moved +0.4% that day; the S&P 500 moved +0.6%.

Wall Street on Bastian: PositiveUBS rates it a Buy, saying the stock does not yet reflect Delta's forecast of fourth-quarter revenue growth above 20%. It expects third-quarter profit of $1.70 a share, below the $1.94 analysts expect, because of higher fuel costs.^L4

Leadership sources (4) · researched Oct 2026

L1Delta Air Lines CEO Richard Anderson to retire; Ed Bastian named successor · Fortune, 2016-02-03
L2Delta Announces Leadership Changes as John Laughter Concludes Distinguished 30-Year Career · Delta Air Lines, 2026-03-05
L3Delta Air Lines, Inc. Form 8-K (appointment of President, Chief Financial Officer and Chief Operating Officer) · Delta Air Lines / SEC, 2026-03-05
L4UBS reiterates Delta Air Lines stock rating on Q3, Q4 outlook · Investing.com, 2026-10-06

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

Can fares outrun fuel costs so Delta earns the roughly $7.35 a share analysts expect for 2027, up from about $5.40 in 2026?^{37,38,39,40,41,17,18}

Bull case: why buyers buy

Fares keep rising faster than fuel while premium and Amex revenue grow and the refinery offsets more of the cost, lifting 2027 earnings above $7.

Premium seats lead the growth. Premium ticket revenue rose 18% last quarter, faster than Main Cabin.
Demand looks strong into year-end. Delta expects fourth-quarter revenue up about 20%, and the quarter is already more than half booked.
The card deal keeps growing. American Express payments rose 15% last quarter.
Delta still makes money despite fuel. Pre-tax profit held at $1.5B last quarter, level with a year earlier. Delta expects about $2.5B of free cash flow this year.

Bear case: why sellers sell

If oil stays high and Main Cabin fares stall, Delta cuts again, earnings stay near $5 to $6 a share and the stock has little room.

Delta missed its own forecast. September-quarter earnings of $1.72 a share fell well short of its July guidance and below analysts' estimate.
Costs other than fuel are rising too. Non-fuel costs per mile rose 7.3%, partly because Delta flew less than planned and summer disruptions added costs.
Margins are slipping into year-end. Delta expects a December-quarter operating margin of 7% to 9%, below the September quarter.
Management can't say what 2027 looks like. CEO Ed Bastian gave no 2027 target, saying it depends on where fuel settles.

Where Delphi landssellWe think the bear case is more likely than today's price assumes.See why

What to watch

The numbers that will settle the debate.

Fuel price per gallon, after refinery savings▼ worsening

$3.61 in the September quarter, up 60%, after a 13-cent refinery benefit. The December outlook assumes $4.25 with a 40-cent benefit.^37,39

Delta's biggest swing cost, with the refinery's profit already netted in.

Premium vs. Main Cabin ticket revenue▲ improving

Premium $6.82B, up 18%; Main Cabin $6.80B, up 12%³⁷

Premium seats earn the higher margins, while Main Cabin fills the plane and shows whether fares are rising.

American Express payments▲ improving

Up 15% in the September quarter; more than $9B expected for 2026^37,39,3

Steady cash from the card deal that does not depend on fuel prices.

Next earnings report

Jan 13

In 69 days

Earnings calls page ↗

Expected earnings per share: $1.42
Expected revenue: $19.50B

What to listen for: Whether Delta delivers $1.15 to $1.65 a share with fuel near $4.25 a gallon, whether the refinery benefit reaches about 40 cents, and what it says about 2027 earnings.^37,39,42

What would prove this wrong

✕Delta cuts its 2026 forecast again or earns under $1.15 a share in December.
✕Fares stop rising while fuel stays near $4 a gallon.
✕American Express payments grow less than 10% a year.
✕Premium revenue growth slows to Main Cabin's pace.

Our ratingSellLow convictionas of Nov 3 close, $83.28 · what ratings mean

Despite strong demand, the cut 2026 forecast and a price near 11 times six-year average earnings leave an expected return near 7%, against 18% for the S&P 500.

12-month target: $87.83 (+5.5%)
Plus dividend: +1.0%
S&P 500, same method, with dividends: +18.5%
Expected vs the market: -12 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $83.28

Target $87.83

bull case20% likely

$109.54 +32%

Oil eases and fares hold, so Delta recovers the fuel cost and 2027 earnings reach the top of analysts' range.

$8.07 mid-cycle earnings per share × 13.6 = $109.54

base case52% likely

$86.64 +4%

Fuel stays near $4 a gallon, but fares and Amex income keep rising and 2027 earnings land near the $7.35 a share analysts expect.

$7.62 mid-cycle earnings per share × 11.4 = $86.64

bear case28% likely

$74.55 -10%

Oil stays high and Main Cabin fares stall, so Delta cuts guidance again and 2027 earnings fall toward the low end of analysts' range.

$7.44 mid-cycle earnings per share × 10 = $74.55

Why these odds: Delta missed estimates for the first time in two years and cut its 2026 forecast, but its fourth-quarter outlook landed near estimates and 2027 estimates held near $7.35. Estimates are mixed, so base stays highest.

How the prices are built: Wall Street expects mid-cycle earnings per share of $7.62 for the year starting a year from now (analysts range from $7.25 to $8.53). Today the stock trades at 11.8 times next year's mid-cycle earnings per share; its five-year middle is 10.09.^{17,18,42,43,37,41,40,22,32,3,7,6,26,1}

What tests the call: Q4 2026 earnings: whether Delta delivers $1.15 to $1.65 a share with fuel near $4.25 a gallon (Jan 12)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 14; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $83.28, investors pay less for each dollar of Delta Air Lines's mid-cycle earnings than for the average stock's

Delta Air Lines trades at 12 times the mid-cycle earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's mid-cycle earnings. That is pricier than it has been 80% of the time over the past five years, when the middle was 10.

Analysts expect mid-cycle earnings to grow about 8% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. At the market's multiple, today's price would only make sense if Delta Air Lines earned about 37% less than forecast over the next year.

Delta Air Lines multiple: 12×
S&P 500 multiple: 19×
Base case: +4%
Bear case: −10%

The skewOur bear case loses about $2.60 for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.

Last earnings

No reported quarters available.