Its stock price soared 7% on Thursday.
Delta Air Lines (NYSE:DAL) stock took off on Thursday, fueled by a record third quarter that pushed the stock price some 7% higher at the opening bell.
One of the key drivers for Delta in Q3 was a surge in corporate travel, which is expected to continue.
Delta generated revenue of $16.7 billion in the quarter, up 6% year-over-year. Adjusted revenue, which excludes its more volatile Monroe Energy refinery business, was $15.2 billion, up 4% year-over-year. That beat estimates of $15.1 billion and set a record for the company in the September quarter.
- Net income: $1.4 billion, up 11% year-over-year.
- Earnings: $2.17 per share, up 10% year-over-year.
- Adjusted earnings: $1.71 per share, up 14% year-over-year and better than estimates of $1.52 per share.
Earnings benefitted by comparison, as the massive CrowdStrike outage that caused airlines to ground planes and cancel flights, occurred in the same quarter a year ago. Earnings were also helped by sound expense management as nonfuel unit cost growth was flat for the quarter.
In addition, adjusted fuel expenses were $2.6 billion, down 8% year-over-year. This was due to a lower adjusted fuel price of $2.25 per gallon, which was 11% lower than the same quarter a year ago.
Corporate travel is back
Revenue soared based on a 9% increase in its premium income, which is business class, first class, and upgraded seats. Domestic passenger revenue increased 5%, with most of the gains coming from an 8% increase in corporate travel. Also, loyalty revenue grew 9% as SkyMiles members deepened their engagement beyond flights.
The rebound in corporate travel is anticipated to continue into 2026. Delta officials said recent corporate surveys show that 90 percent of companies expect their travel volume to increase or remain steady in 2026. That is 5 percentage points higher than last year’s survey at this time.
“For the December quarter, we expect total revenue growth of 2 percent to 4 percent over last year’s record performance, with healthy sequential unit revenue improvement driven by continued domestic strength and meaningful improvement in transatlantic unit revenue,” Glen Hauenstein, Delta’s president, said.
Delta also expects an operating margin of 10.5% to 12% in Q4, up from 10.1% in Q3, while the adjusted EPS outlook is $1.60 to $1.90, compared to $1.71 in Q3. Here is the guidance for the full fiscal year.
- Adjusted earnings: $6 per share, which is updated from the previous range of $5.25 to $6.25 per share.
- Free cash flow: $3.5 billion to $4 billion, up from previous range of $3B to $4B.
Delta stock rose 7% on Thursday based on the earnings and outlook, but it also lifted its rival carriers. United (NYSE:UAL) stock jumped 5.5% while American (NYSE:AAL) soared 4%.
Delta stock is dirt-cheap right now, trading at 8 times earnings. Its outlook, low valuation, free cash flow and expense management put it in good value stock territory. It has a median price target of $69.60, which would be 22% upside.
