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01/14 09:22
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Delta's earnings call presents a positive outlook with strong financial performance, robust revenue growth, and strategic investments in customer experience and fleet renewal. The Q&A section reinforces this sentiment, highlighting strong corporate demand, international market potential, and effective debt management. However, some concerns exist regarding the potential 10% rate cap on credit cards and vague responses on revenue sustainability. Overall, the positive aspects outweigh the negatives, suggesting a likely stock price increase, especially given the emphasis on growth and profitability.
Full Year Revenue $58.3 billion, up 2.3% year-over-year. The increase was driven by diversified revenue streams, with premium revenue growing 7%, cargo revenue increasing 9%, and maintenance repair and overhaul (MRO) revenue growing 25%.
Free Cash Flow $4.6 billion, the highest in Delta's history. This was supported by strong cash generation and reinvestment in the business, including 38 new aircraft deliveries.
Operating Margin 10% for the full year, consistent with the long-term target. This was achieved through disciplined cost management and revenue performance.
Earnings Per Share (EPS) $5.82 for the full year. This was consistent with expectations despite the impact of the government shutdown.
Return on Invested Capital (ROIC) 12%, well above the cost of capital and placing Delta in the upper half of the S&P 500. This reflects the strength of Delta's brand and competitive advantages.
American Express Remuneration $8.2 billion, up 11% year-over-year. This growth was driven by over 1 million new card acquisitions and double-digit co-brand spend growth in every quarter.
December Quarter Revenue $14.6 billion, up 1.2% year-over-year. This included a 2-point impact from the government shutdown, with high single-digit growth in diverse revenue streams.
Corporate Sales Grew by 8% year-over-year in the December quarter, led by banking, consumer services, and media sectors.
Non-Fuel CASM (Cost per Available Seat Mile) Increased 4% year-over-year in the December quarter, driven by a 1% increase in capacity and impacts from the government shutdown and weather disruptions.
Adjusted Net Debt Approximately $14 billion at year-end, with gross leverage of 2.4x. This reflects a reduction in debt by $2.6 billion during the year.
Delta Sync platform: Achieved over 115 million annual logins, enabling personalized engagement and partnerships.
Delta Concierge: Introduced as an innovative digital tool to enhance customer experience.
Free WiFi: More than 1,100 aircraft equipped with fast and free WiFi.
International expansion: Announced plans to expand into high-growth Asia and Middle East markets in 2026.
Boeing 787-10 order: Ordered 30 Boeing 787-10s with options for 30 more, enhancing international network and long-haul capabilities.
Operational reliability: Recognized as the U.S. industry's most on-time airline for the fifth consecutive year by Cirium.
Fleet strategy: Focused on retiring older fleets and scaling high-margin, large narrow-body aircraft for efficiency.
Loyalty ecosystem: SkyMiles program and Delta Amex co-brand card portfolio drove significant revenue growth, with co-brand remuneration growing 11% to $8.2 billion in 2025.
Premium revenue growth: Premium revenue grew 7% year-over-year, reflecting strong demand for premium products.
Government Shutdown Impact: The government shutdown reduced Delta's pretax profit by $200 million and earnings per share by $0.25. It also impacted capacity and non-fuel unit cost growth by about 1 point.
FAA-Mandated Flight Reductions: The FAA-mandated flight reductions and weather disruptions negatively impacted capacity and non-fuel unit cost growth by about 1 point.
Economic Uncertainty: While the U.S. economy remains on firm footing, there is an implied risk of economic fluctuations that could impact consumer and corporate travel demand.
Increased Capital Expenditure: Delta plans to increase capital expenditure to $5.5 billion in 2026, which could pressure free cash flow compared to 2025.
Transition to Partial Taxpayer Status: Delta's transition to becoming a partial taxpayer in 2026 is expected to reduce free cash flow compared to 2025.
Supply Chain and Fleet Renewal Challenges: The renewal and expansion of Delta's wide-body fleet, including the order for 30 Boeing 787-10s, could face supply chain disruptions or delays, impacting operational efficiency and cost management.
Revenue Growth: Delta expects revenue growth of 5% to 7% in the March quarter of 2026, supported by strong consumer and corporate demand.
Earnings Per Share (EPS) Growth: Delta projects EPS growth of 20% year-over-year in 2026, with a full-year EPS range of $6.50 to $7.50.
Free Cash Flow: Delta anticipates generating free cash flow of $3 billion to $4 billion in 2026, which will support debt reduction and shareholder returns.
Capacity Growth: Delta plans to grow capacity by 3% for the full year 2026, with all new seat growth concentrated in premium cabins.
Fleet Expansion: Delta announced an order for 30 Boeing 787-10s, with options for 30 more, to enhance its international network and long-haul capabilities starting in 2031.
Co-Brand Card Revenue: Delta expects high single-digit growth in co-brand remuneration in 2026, keeping it on track to achieve a $10 billion goal within the next few years.
International Expansion: Delta plans to expand into high-growth Asia and Middle East markets in 2026 while renewing its wide-body fleet with larger, more efficient aircraft.
Non-Fuel Costs: Delta expects non-fuel unit cost growth to remain within its long-term framework of low single digits in 2026.
Profit Sharing: Delta announced a $1.3 billion profit-sharing payout for employees in February 2025, one of the largest in its history.
Shareholder Returns: Delta expects to generate $3 billion to $4 billion in free cash flow in 2026, which will support further debt reduction and growth in shareholder returns.
Delta's earnings call presents a positive outlook with strong financial performance, robust revenue growth, and strategic investments in customer experience and fleet renewal. The Q&A section reinforces this sentiment, highlighting strong corporate demand, international market potential, and effective debt management. However, some concerns exist regarding the potential 10% rate cap on credit cards and vague responses on revenue sustainability. Overall, the positive aspects outweigh the negatives, suggesting a likely stock price increase, especially given the emphasis on growth and profitability.
Delta's earnings call highlights strong financial performance, strategic product expansion, and robust demand forecasts, especially in premium sectors. The Q&A session reaffirms management's confidence in margin improvements and sustainable growth in high-margin revenue streams. Despite some vague responses, the overall sentiment is positive, driven by strategic focus on premium offerings, international network planning, and technology investments. The lack of specific guidance on certain future metrics is a minor concern, but not enough to overshadow the positive outlook.
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