Delta Beats Q4 Earnings & Sales Estimates, Inks Deal on Fleet-Upgrade

Core Insights - Delta Air Lines (DAL) reported fourth-quarter 2025 earnings of $1.55 per share, exceeding the Zacks Consensus Estimate of $1.53, but reflecting a 16.22% year-over-year decline due to high labor costs [1] - Revenues for the quarter reached $16 billion, surpassing the Zacks Consensus Estimate of $15.63 billion, and showing a 2.9% increase year-over-year [2] Financial Performance - Adjusted operating revenues (excluding third-party refinery sales) increased 1.2% year-over-year to $14.6 billion, impacted by approximately 2 points due to the government shutdown [2] - Passenger revenues, which constituted 80.7% of total revenues, rose 1% year-over-year to $12.91 billion, with domestic passenger revenues remaining flat due to the government shutdown [5] - Cargo revenues decreased by 1% year-over-year to $246 million, while other revenues increased by 14% to $2.84 billion [6] - Adjusted operating margin was 10.1% in Q4 2025, down from 12% a year ago [6] Operational Metrics - Revenue passenger miles decreased by 1% to 59.86 billion, while capacity expanded by 1.3% to 72.9 billion [7] - Load factor decreased by 200 basis points to 82%, slightly below the estimate of 84% [7] - Total operating expenses rose by 5% to $14.5 billion, with salaries and related costs increasing by 11% to $4.6 billion due to higher wages from a new pilot contract [8] Fleet and Growth Strategy - Delta has agreed to acquire 30 Boeing 787-10 widebody aircraft, with options for an additional 30, expected to enhance fuel efficiency and long-haul capabilities [3][4] - The order is part of Delta's international growth strategy, aimed at strengthening its global footprint [4] Cash Flow and Debt - At the end of Q4 2025, Delta had cash and cash equivalents of $4.3 billion, up from $3.07 billion at the end of Q4 2024 [9] - Adjusted net debt decreased by $3.7 billion to $14.3 billion [9] - Adjusted operating cash flow for the December quarter was $2.2 billion, with free cash flow of $1.8 billion [10] Future Guidance - For Q1 2026, Delta expects adjusted earnings per share in the range of $0.50 to $0.90, with an adjusted operating margin of 4.5% to 6% [11] - Full-year earnings guidance for 2026 is projected between $6.5 and $7.5 per share, indicating a 20% year-over-year growth [12]