Just a few months ago, Delta Air Lines was ringing the alarm bell over the ‘broad economic uncertainty’ that the United States was facing, saying it planned to slash costs and growth as domestic bookings tumbled.
On Thursday, however, the airline was playing a far more optimistic tune as it reported far better financial results for the June quarter than it had initially anticipated.
The Atlanta-based carrier reported record revenue on a 13% operating margin,
generating $1.8 billion in pre-tax profit. As a result, Delta has now reinstated its full-year outlook that it pulled back in April.
“As we look to the second half of our centennial year, we remain focused on executing our strategic priorities and managing the levers within our control to deliver strong earnings and cash flow,” commented Chief Executive Ed Bastian.
“Reflecting our confidence in the business, we are restoring financial guidance with an expectation for earnings per share of $5.25 to $6.25 and free cash flow of $3 to $4 billion, consistent with our long-term free cash flow targets.”
Key Figures (April to June 2025)
- Operating revenue of $16.6 billion
- Operating income of $2.1 billion
- Operating Margin of 12.6%
- Pre-tax income of $2.6 billion with a pre-tax margin of 15.5 percent
- Operating cash flow of $1.9 billion
While overall growth remains flat on last year, Delta said that forward bookings had stabilized and that it had seen a shift in booking behavior. Rather than booking months in advance, passengers were now waiting much sooner to their planned departure date.
The airline has been helped by a significant drop in fuel costs, with the total bill plummeting by 11% year-on-year, as well as an ongoing cost-cutting program across the business.
And while Delta is still seeing weaker demand amongst ‘price-sensitive’ customers, the same can’t be said for passengers booking in premium cabins, especially to international destinations.
In fact, premium cabin revenue increased by 5%, while international revenue grew by 2%.
There’s some evidence that Europeans are steering away from visiting the United States, but transatlantic demand, especially amongst Americans, remains strong, with revenue growing by 2% over the peak summer period.
Back in April, Delta said its diversified revenue streams would help it weather any storm brought about by economic uncertainty, and that seems to have played out exactly as the airline claimed.
Revenue from Delta’s loyalty program grew by 8% from last year, while American Express paid the airline $2 billion as part of its long-term partnership.
What comes after the summer peak is still a little uncertain, with Bastian now saying the airline will make ‘surgical’ cuts to some domestic flying to manage the changing demand landscape.
Delta’s results reflect something that we have seen across the US airline industry. While low-cost carriers are struggling, airlines with a strong premium footprint are surging ahead.
Delta and its rival United Airlines have benefited the most from this shift, having built the foundations of a premium-focused product years ago. In contrast, American Airlines is only now realizing it may have made a major error in trying to emulate low-fare carriers.
