Delta Air Lines, Inc. (DAL) | Investment Case

1. Company Snapshot

1.a. Company Description

Delta Air Lines, Inc.provides scheduled air transportation for passengers and cargo in the United States and internationally.The company operates through two segments, Airline and Refinery.

Its domestic network centered on core hubs in Atlanta, Minneapolis-St. Paul, Detroit, and Salt Lake City, as well as coastal hub positions in Boston, Los Angeles, New York-LaGuardia, New York-JFK, and Seattle; and international network centered on hubs and market presence in Amsterdam, Mexico City, London-Heathrow, Paris-Charles de Gaulle, and Seoul-Incheon.The company sells its tickets through various distribution channels, including delta.com and the Fly Delta app, reservations, online travel agencies, traditional brick and mortar, and other agencies.It also provides aircraft maintenance and engineering support, repair, and overhaul services; and vacation packages to third-party consumers, as well as aircraft charters, and management and programs.

The company operates through a fleet of approximately 1,200 aircrafts.Delta Air Lines, Inc.was founded in 1924 and is based in Atlanta, Georgia.

Show Full description

1.b. Last Insights on DAL

Delta Air Lines' recent performance was driven by strong Q3 results, with record revenue and profitability fueled by premium demand, cost control, and lower fuel prices. The company's positive Q4 and FY2025 guidance, improved free cash flow, and reduced WACC underpin the investment thesis for further upside (Source: $64 target price, Buy rating). Additionally, easing fuel costs and dividend hikes aided momentum as the U.S. government shutdown ended. Robust corporate travel and growing premium ticket revenue also contributed to the company's performance.

1.c. Company Highlights

Last Price	67.1
Change Percentage	-0.21%
Open	66.75
Previous Close	67.24
Market Cap ( Millions)	43814
Volume	6936617
Year High	69.98
Year Low	34.74
M A 50	59.38
M A 200	53.46

FCF Yield	7.01%
Dividend Yield	1.01%
ROE	27.64%
Debt / Equity	115.40%
Net Debt / EBIDTA	187.95%
Price To Book	2.31
Price Earnings Ratio	9.39
Price To FCF	14.26
Price To sales	0.7
EV / EBITDA	6.47

2. Delta Air Lines' Q3 2025 Earnings: Strong Premium Demand Drives Profitability

Delta Air Lines reported a 4% revenue growth in its September quarter 2025, driven by premium, corporate, and loyalty segments, resulting in a pretax income of $1.5 billion and earnings per share (EPS) of $1.71, beating estimates of $1.52. The company's operating margin stood at 11.2%, and it generated $830 million in free cash flow, bringing the year-to-date total to $2.8 billion. The return on invested capital (ROIC) was 13%. Revenue for the quarter reached a record $15.2 billion, with total unit revenue improving by 0.3% year-over-year. Domestic unit revenue turned positive, and corporate sales grew 8% over the prior year. Premium revenue increased 9%, and loyalty revenue improved 9%.

Publication Date: Oct -09

                                    📋 Highlights
                                    Revenue Growth::
                                                Q3 revenue reached $15.2 billion, a 4% increase YoY, driven by 9% premium revenue growth and 9% loyalty revenue growth.
Profitability::
                                                Pretax income of $1.5 billion ($1.71 EPS) with an 11.2% operating margin, supported by $830 million in free cash flow for the quarter.
Free Cash Flow::
                                                Year-to-date free cash flow totaled $2.8 billion, with $3.5–$4 billion expected for full-year 2025, reflecting strong operational efficiency.
Premium Demand::
                                                30–40% of premium revenue stems from corporate travel, with 9% growth attributed to affluent travelers and upgrading trends.
Outlook::
                                                December operating margin forecasted at double digits, with full-year EPS guidance of ~$6 and low-single-digit 2026 revenue growth assumptions.

                                

Operational Performance

Operationally, Delta led the industry in reliability and customer experience. The company expects a double-digit operating margin in the December quarter, with earnings comparable to the September quarter. For the full year, the earnings outlook is approximately $6 per share, and free cash generation is expected to be between $3.5 billion and $4 billion. Glen Hauenstein noted that main cabin seats are down slightly year-over-year, but rationalization of capacity in hubs has allowed for unit revenue growth.

Revenue Growth Drivers

The growth in premium revenue is driven by changes in consumer behavior, with more affluent members taking more trips and less affluent flyers trading up to premium experiences. Corporate travel growth of 8% is attributed to the company's sales team's efforts and its bread-and-butter corporate travel business. Dan Janki mentioned that the company is still in the early to middle innings of driving efficiency through growing into their workforce, fleet, and airport assets.

Valuation Metrics

With a P/E Ratio of 8.34, Delta Air Lines' stock appears to be reasonably valued. The EV/EBITDA ratio stands at 5.96, indicating a relatively low valuation compared to its earnings before interest, taxes, depreciation, and amortization. The ROIC of 13% is higher than the ROE of 27.64% is quite high, suggesting efficient use of equity. The Free Cash Flow Yield is 7.9%, which is attractive.

Outlook and Guidance

For 2026, Delta assumes low single-digit revenue growth, with main cabin improvement as part of its base revenue assumptions, alongside premium product and card spend growth. The company aims for mid-teens margins, driven by high-margin revenue streams, premium seats, and loyalty growth. Analysts estimate next year's revenue growth at 5.8%.

3. NewsRoom

2025's Takeoffs & Touchdowns for Airline Stocks, Outlook for 2026

Dec -04

Source: youtube.com

Citi Initiates Airline Stocks As A Buy, But Says Sell This One

Dec -04

Source: investors.com

Stock Market Live December 4: S&P 500 (SPY) Flat Ahead of Potential Rate Cuts

Dec -04

Source: 247wallst.com

Edgestream Partners L.P. Acquires 40,611 Shares of Delta Air Lines, Inc. $DAL

Dec -04

Source: defenseworld.net

Delta lost estimated $200 million from record-long US government shutdown, CEO says

Dec -03

Source: nypost.com

Market Today: Fed hopes lift stocks; AWS AI rollout; Prada-Versace deal

Dec -03

Source: gurufocus.com

Delta Air Lines, Inc. (DAL) Presents at Morgan Stanley Global Consumer & Retail Conference 2025 Transcript

Dec -03

Source: seekingalpha.com

I allowed my friend to use my Delta air miles, but she used an extra 48K to change her ticket without telling me. What now?

Dec -03

Source: marketwatch.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.10%)

6. Segments

Airline

Expected Growth: 6.5%

The Airline segment is expected to grow faster than the global average due to increasing demand for air travel, driven by economic growth and a recovering global economy. Delta's strong brand and operational efficiency will also contribute to its growth.

Refinery

Expected Growth: 4.5%

The Refinery segment is expected to grow at a slower rate due to the volatility of the refining industry and the potential for fluctuations in crude oil prices and refining margins. However, the refinery's output is partly used by Delta's Airline segment, providing a stable demand.

Intersegment Sales/Other

Expected Growth: 5.0%

The growth of Intersegment Sales/Other is tied to the activities of the Airline and Refinery segments. As these segments grow, the intersegment transactions are likely to increase, driving growth in this segment, albeit at a moderate rate due to the eliminations of intersegment transactions.

7. Detailed Products

Delta One

Delta One is a premium business class product offered on long-haul international flights, featuring lie-flat beds, gourmet meals, and personalized service.

Delta Premium Select

Delta Premium Select is a premium economy product offered on select international flights, featuring more legroom, adjustable headrests, and upgraded amenities.

Delta Comfort+

Delta Comfort+ is an economy class product that offers more legroom, priority boarding, and dedicated overhead bin space.

Main Cabin

Main Cabin is Delta's economy class product, offering affordable fares and standard amenities.

SkyMiles

SkyMiles is Delta's loyalty program, allowing members to earn and redeem miles for flights, upgrades, and other rewards.

Delta Vacations

Delta Vacations is a vacation package product that bundles flights, hotels, and car rentals for a seamless travel experience.

Delta Cargo

Delta Cargo is a cargo shipping service that offers fast and reliable transportation of goods worldwide.

Delta Private Jets

Delta Private Jets is a private jet charter service that offers luxury travel experiences for individuals and groups.

8. Delta Air Lines, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Delta Air Lines faces moderate threat from substitutes such as trains, buses, and carpooling for short-distance travel. However, for long-distance travel, air travel remains the most convenient option, reducing the threat from substitutes.

Bargaining Power Of Customers

Delta Air Lines faces high bargaining power from customers due to the availability of multiple airlines and online travel agencies, allowing customers to compare prices and services easily.

Bargaining Power Of Suppliers

Delta Air Lines has a low bargaining power from suppliers due to its large scale of operations and long-term contracts with suppliers, giving it negotiating power.

Threat Of New Entrants

Delta Air Lines faces a low threat from new entrants due to the high barriers to entry in the airline industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

Delta Air Lines operates in a highly competitive industry with intense rivalry among major airlines, leading to frequent price wars and advertising campaigns.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	71.07%
Debt Cost	4.24%
Equity Weight	28.93%
Equity Cost	10.80%
WACC	6.14%
Leverage	245.66%

11. Quality Control: Delta Air Lines, Inc. passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Fastenal

A-Score: 6.1/10

Value: 0.9

Growth: 5.8

Quality: 7.8

Yield: 5.0

Momentum: 8.0

Volatility: 9.0

1-Year Total Return ->

General Dynamics

A-Score: 6.0/10

Value: 3.6

Growth: 4.7

Quality: 6.2

Yield: 4.0

Momentum: 7.5

Volatility: 10.0

1-Year Total Return ->

Paychex

A-Score: 5.8/10

Value: 1.8

Growth: 5.8

Quality: 9.0

Yield: 6.0

Momentum: 3.0

Volatility: 9.3

1-Year Total Return ->

Delta

A-Score: 5.1/10

Value: 7.0

Growth: 6.7

Quality: 5.1

Yield: 1.0

Momentum: 6.0

Volatility: 4.7

1-Year Total Return ->

Grainger

A-Score: 5.1/10

Value: 2.2

Growth: 7.8

Quality: 6.4

Yield: 2.0

Momentum: 3.0

Volatility: 9.0

1-Year Total Return ->

Lockheed Martin

A-Score: 4.7/10

Value: 2.8

Growth: 5.1

Quality: 4.5

Yield: 6.0

Momentum: 1.0

Volatility: 9.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-1.67%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.14%

Delta Air Lines, Inc. - US2473617023

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on DAL

1.c. Company Highlights

Average Growth

Stable Momentum

Medium Volatility

Earnings Beats

Revenues Beats

Average Yield

Fairly Valued

Earnings Miss

Strong Momentum

Average Quality

2. Delta Air Lines' Q3 2025 Earnings: Strong Premium Demand Drives Profitability

Operational Performance

Revenue Growth Drivers

Valuation Metrics

Outlook and Guidance

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.10%)

6. Segments

Airline

Expected Growth: 6.5%

Refinery

Expected Growth: 4.5%

Intersegment Sales/Other

Expected Growth: 5.0%

7. Detailed Products

Delta One

Delta Premium Select

Delta Comfort+

Main Cabin

SkyMiles

Delta Vacations

Delta Cargo

Delta Private Jets

8. Delta Air Lines, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Delta Air Lines, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

67.1$

Current Price

67.1$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA