Delta defies summer travel slump as profits beat expectations, push up stock

Delta Air Lines executives say they believe the current slump in domestic air travel will pass soon, prompting the carrier to restore a full-year earnings forecast that it scrapped this spring amid market volatility.

The Atlanta-based carrier, which is the first major U.S. airline to report its earnings for the early summer travel season, is a bellwether for the state of an industry. The fortunes of commercial airlines are tied to travel budgets that are often reduced at times, such as now, of economic uncertainty.

Low consumer confidence and high volatility in the stock market following the shifting U.S. tariff policies quelled travel. Federal Reserve data shows the nation’s economy shrank in the first quarter, but both sentiment and the stock market have stabilized recently, boosting airline optimism.

Delta fashions itself an airline for business travelers or more affluent leisure passengers. The airline’s executives said its target customer comes from a household making at least $100,000 per year and is less likely to feel the financial strain that budget-conscious travelers may experience.

Yet, like its peers, Delta’s ambition for 2025 is lower than it was at the start of the year.

In January, the airline predicted that a travel hot streak would deliver record profits and continue to lift an industry walloped by the COVID-19 pandemic only a few years ago. Then, in April, threats of hefty tariffs and broad uncertainty about the U.S. economy’s trajectory led Delta executives to toss out financial projections for the full year.

On Thursday, the airline restored its full-year guidance, bringing with it a more measured outlook. Delta now expects to close out the year with $6.25 earnings per share at best, after forecasting upward of $7.35 per share in January.

The airline reported consensus-beating profits Thursday as demand remained strong for its premium and loyalty products, which made up for a dip in seats sold in the main cabin.

Delta’s stock closed up 12% on the day.

“There seems to be growing optimism. But clearly, we still have a long ways to go,” CEO Ed Bastian told stock analysts during a call Thursday morning.

For the April-June period, Delta saw sustained international travel demand — an area the airline has focused resources — including more nonstops from Minneapolis-St. Paul International Airport, its second-largest hub.

Credit card spending and the company’s earnings from its American Express partnership were also bright spots. Cheaper oil reduced its fuel costs by 11% compared with the same period a year ago.

Despite the upbeat outlook, a key airline metric wasn’t so rosy. Delta and other major airlines have cut back on capacity to meet some of the lessened demand. Its revenue measured against the number of available seats and miles flown — a key efficiency metric — dipped 3% in the latest quarter.

Main cabin ticket sales fell 5% compared with the same period last year. Meanwhile, Delta’s premium ticket sales rose 5%, loyal travel awards revenue jumped 12% and service fees — such as bag fees — drew in 2% more revenue. Those factors lifted overall passenger revenue, which was flat compared with the second quarter of 2024.

The company’s earnings results beat Wall Street analysts’ estimates. Adjusted earnings per share arrived at $2.10, 7 cents above the consensus. Reported quarterly profit landed at $1.8 billion, a 10% drop compared with last year’s. Total revenue was $16.6 billion, beating the consensus of $16.2 billion.

As executives eye better margins on the second half of summer, Delta President Glen Hauenstein said third-quarter revenue should break even with 2024 at worst or be up as much as 4%.

He said the weakness in main cabin sales could turn around as early as next quarter.

“I think we have a good shot of it becoming positive, or at least neutral,” by the third or fourth quarter of this year, Hauenstein said.