Is Delta Air Lines Stock a Buy After a Strong Earnings Report?

Core Insights - Delta Air Lines delivered a strong June-quarter update, highlighting resilient premium demand and steady co-brand card economics while acknowledging ongoing softness in economy seats [1][3] - The company is focusing on premium revenue and loyalty economics, trimming weaker main cabin flights to enhance margins [2][4] Financial Performance - Delta's second quarter produced record revenue of approximately $16.6 billion, with an operating margin of 13% and earnings per share of $2.10 on a non-GAAP basis [3] - Management reaffirmed full-year targets for earnings per share between $5.25 to $6.25 and free cash flow of $3 billion to $4 billion [3][6] Revenue Mix and Strategy - The mix between main cabin and premium cabins is crucial, with premium products and the Delta-American Express partnership offsetting pressure from soft main cabin margins [4][5] - Delta is reallocating capacity by removing weaker trips to consolidate demand and improve unit revenues [5][6] Market Outlook - Delta's management expressed confidence in the sustainability of premium demand, with no indications of diminishing demand in forward bookings [5] - Shares are trading at approximately 10 to 11 times this year's expected earnings, suggesting potential upside if execution remains strong [6]