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DA

DELTA AIR LINES, INC. (DAL)·Q1 2025 Earnings Summary

Executive Summary

  • March quarter 2025 delivered adjusted EPS of $0.46, above Wall Street consensus $0.39, on GAAP operating revenue of $14.04B vs consensus $13.46B; adjusted operating revenue grew 3.3% YoY to $12.98B. Delta guided 2Q25 EPS to $1.70–$2.30 and operating margin of 11–14% while reducing second-half capacity growth to flat YoY, prioritizing margins and cash flow . Values retrieved from S&P Global.*
  • Premium, loyalty and international remained resilient: premium revenue +7% YoY, Amex remuneration a record $2.0B (+13% YoY), international passenger revenue up mid-single digits led by Pacific (+16%) and Transatlantic unit revenue +8% .
  • Costs were well managed: non-fuel CASM-Ex rose 2.6% YoY to 14.44¢; adjusted fuel price fell 11% YoY to $2.45/gallon; free cash flow was $1.28B with adjusted net debt reduced to $16.88B (−$1.10B vs 4Q24) .
  • Full-year 2025 guidance not reaffirmed amid macro and tariff uncertainty; management highlighted actions to protect margins (capacity and cost levers) and reiterated at least $3B of debt repayment in 2025 .

What Went Well and What Went Wrong

What Went Well

  • “Record March quarter revenue supported by diverse revenue streams,” with adjusted revenue up 3.3% YoY and nearly 60% from premium/loyalty/cargo/MRO; premium revenue +7% YoY; Amex remuneration hit a March-quarter record $2.0B (+13% YoY) .
  • International strength: Pacific revenue +16% YoY on double-digit capacity growth; Transatlantic revenue +5% with unit revenue +8%; Latin America +5% .
  • Balance sheet progress: adjusted net debt $16.9B (−$1.1B vs 4Q24); gross leverage 2.6x; Moody’s upgrade to the highest credit rating in decades; free cash flow $1.28B in Q1 .

What Went Wrong

  • Domestic/Main Cabin softness: adjusted TRASM −1.0% YoY; load factor fell 130 bps YoY to 81.4%; management cited weaker Main Cabin demand and choppy corporate volumes (flattish YoY) .
  • Q1 delivered below January guidance: initial 1Q25 outlook was EPS $0.70–$1.00 with revenue up 7–9% YoY; actual adjusted EPS was $0.46 and adjusted operating revenue +3.3% YoY, reflecting a more challenging macro backdrop .
  • Tariff and macro uncertainty: management expects to defer aircraft deliveries if tariffs apply and reduced second-half capacity growth to flat YoY to protect margins and cash flow .

Financial Results

Revenue, EPS, Margins vs Prior Quarters

MetricQ3 2024Q4 2024Q1 2025
Operating Revenue (GAAP, $USD B)$15.68 $15.56 $14.04
Operating Revenue (Adjusted, $USD B)$14.59 $14.44 $12.98
Diluted EPS (GAAP, $)$1.97 $1.29 $0.37
Diluted EPS (Adjusted, $)$1.50 $1.85 $0.46
Operating Margin (GAAP, %)8.9% 11.0% 4.0%
Operating Margin (Adjusted, %)9.4% 12.0% 4.6%

Year-over-Year Comparison (Q1 2025 vs Q1 2024)

MetricQ1 2024Q1 2025
Operating Revenue (GAAP, $USD B)$13.75 $14.04
Operating Revenue (Adjusted, $USD B)$12.56 $12.98
Diluted EPS (GAAP, $)$0.06 $0.37
Diluted EPS (Adjusted, $)$0.45 $0.46
TRASM (Adjusted, ¢)19.17 18.97
Operating Margin (Adjusted, %)5.1% 4.6%
CASM-Ex (¢)14.08 14.44

Results vs Consensus Estimates (Q1 2025)

MetricConsensus EstimateActual
Adjusted EPS ($)0.3861*0.46
Operating Revenue (GAAP, $USD B)13.46*14.04

Values retrieved from S&P Global.*

Segment Breakdown (Q1 2025)

SegmentRevenue ($USD M)YoY ChangeUnit Rev (YoY)Capacity (YoY)
Domestic$8,101 +1% −1% +4%
Atlantic$1,372 +5% +5% −3%
Latin America$1,334 +5% −0% to −? modestly negative +8%
Pacific$673 +16% +16% −7%
Passenger Revenue Total$11,480 +3% ——

Passenger Revenue Mix (Q1 2025)

CategoryRevenue ($USD M)YoY Change
Ticket – Main Cabin$5,361 −1%
Ticket – Premium Products$4,707 +7%
Loyalty Travel Awards$940 +11%
Travel-Related Services$472 +4%

Other Revenue (Q1 2025)

CategoryRevenue ($USD M)YoY Change
Refinery$1,062 −10%
Loyalty Program$807 +2%
Ancillary Businesses$189 +5%
Miscellaneous$294 +5%
Other Revenue Total$2,352 −4%

KPIs (Q1 2025)

MetricQ1 2025
Revenue Passenger Miles (mm)55,678
Available Seat Miles (mm)68,401
Passenger Load Factor (%)81.4%
TRASM (GAAP, ¢)20.53
TRASM (Adjusted, ¢)18.97
CASM (¢)19.69
CASM-Ex (¢)14.44
Avg Fuel Price/Gallon (Adjusted, $)2.45
Operating Cash Flow (Adjusted, $USD M)2,444
Free Cash Flow ($USD M)1,280

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue YoYQ1 2025Up 7%–9% Actual Adjusted +3.3% Miss vs guide
EPSQ1 2025$0.70–$1.00 Actual Adjusted $0.46 Miss vs guide
Operating MarginQ1 20256%–8% Actual Adjusted 4.6% Lower than guide
Total Revenue YoYQ2 2025—Down 2% to up 2% New guide
Operating MarginQ2 2025—11%–14% New guide
EPSQ2 2025—$1.70–$2.30 New guide
FY EPSFY 2025>$7.35 (non-GAAP) Not reaffirming FY 2025 guidance Withdrawn/Deferred
Capacity Growth2H 2025+3%–4% FY backdrop in Jan Second-half capacity growth reduced to flat YoY; domestic Main Cabin seats down Lowered
Net Aircraft AdditionsFY 2025~40 deliveries; Capex ~$5B Net additions <1% (10 or fewer incremental aircraft) Lowered
WorkforceFY 2025Headcount growth below capacity Workforce below 2024 levels via attrition Lowered
Debt RepaymentFY 2025Pay $3B maturities Repay at least $3B; opportunistic higher-cost debt Maintained
DividendQ1/Q2 2025$0.15/qtr declared $0.15/qtr declared (Apr 24) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Premium/loyalty resiliencePremium outperformed main cabin; Amex remuneration $1.8–$2.0B/qtr; revenue mix >57% from diversified streams Premium +7% YoY; Amex remuneration $2.0B (+13%) Improving
Domestic/Main Cabin softnessDomestic unit revenue inflected positive in Sept; constructive backdrop into 2025 Main Cabin softness persists; domestic demand cautious; capacity trimmed in off-peak Worsening
International strengthTransatlantic strong off-peak; Pacific growth; Latin improving Transatlantic unit rev +8%; Pacific +16% rev; Latin +5% Improving
Corporate travelManaged corporate sales up 7–10% YoY in late 2024; survey positive Corporate sales up low-single digits; confidence moderated; flattish volumes Softening
Capacity disciplineIndustry supply rationalization; Delta growing into core hubs Reduce 2H capacity to flat; trim Tue/Wed/off-peak; target high recapture More disciplined
Tariffs/regulatoryInvestor Day framework; operational awards Will defer deliveries with tariffs; “will not be paying tariffs”; some goods US-sourced (~85% services spend) Risk elevated

Management Commentary

  • CEO: “Given broad economic uncertainty around global trade, growth has largely stalled... we are protecting margins and cash flow by reducing planned capacity growth in the second half to flat over last year” .
  • President: “Premium revenue growth continues to outpace main cabin... Amex remuneration of $2.0 billion was a March quarter record, up 13 percent year-over-year” .
  • CFO: “For the June quarter, we expect an operating margin of 11% to 14% and earnings of $1.70 to $2.30 per share… net aircraft additions this year to be less than 1%, with 10 or fewer incremental aircraft” .

Q&A Highlights

  • Capacity actions: 2Q largely intact; trimming starts in August (Southeast focus), targeting off-peak domestic Main Cabin with high recapture; accelerate retirements (75/76, older A319/320) .
  • Tariffs: Delta will defer any deliveries with tariffs and “will not be paying tariffs” on aircraft; negotiating with Airbus; prior experience mitigating via delivery alternatives .
  • Premium vs Main Cabin: Premium resilience continues; spreads widening over Main Cabin; booking curve moved earlier to mitigate close-in weakness .
  • Demand signals: International cash sales strong through summer; Canada bookings saw drop-off; Mexico mixed; domestic cancellations not notably higher; close-in sales above last year .
  • Cost management: Non-fuel costs up low single digits; workforce below 2024 via attrition; supplier and maintenance levers to offset reduced growth .

Estimates Context

  • Q1 2025 beat: Adjusted EPS $0.46 vs consensus $0.386; GAAP operating revenue $14.04B vs consensus $13.46B. Delta’s January guidance for Q1 (EPS $0.70–$1.00; revenue +7–9% YoY) proved too optimistic given macro softness; management pivoted to margin/cash flow protection and provided 2Q25 guidance with double-digit operating margins . Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Delta executed a defensive pivot: cutting second-half capacity growth to flat and tightening off-peak/domestic Main Cabin, supporting margins and free cash flow amid macro uncertainty .
  • Premium/loyalty/international engines remain robust (premium +7% YoY; Amex remuneration $2.0B; international strength), underpinning revenue durability versus Main Cabin softness .
  • Q1 missed internal guidance but beat Street consensus; forward setup features 2Q margins of 11–14% and EPS $1.70–$2.30, with capacity and cost levers in place .
  • Balance sheet strengthening continues (gross leverage 2.6x; adjusted net debt −$1.1B QoQ); at least $3B of 2025 debt repayment guides durability .
  • Tariff risk is meaningful near-term; management indicated willingness to defer aircraft to avoid tariff costs, which could temper delivery pace but protect ROIC .
  • Near-term trading: watch demand signals in domestic Main Cabin and Canada/Mexico plus tariff headlines; upside catalysts include premium/international resilience and execution on cost controls .
  • Medium-term thesis: diversified revenue mix (~60%), premium seat growth, Amex scale, and disciplined capacity/capex should sustain industry-leading margins and cash generation once macro/tariff visibility improves .