To The Moon

$Delta Air Lines(DAL)$ is scheduled to report its fiscal Q2 2025 earnings on Thursday, 10 July 2025, before the market opens.

Earnings Per Share (EPS) (Adjusted) : the consensus estimate for earnings per share (EPS) adjusted is expected to come in at $1.92 per share which represent a ↓ 18.6% vs. $2.36 YoY Change.

Revenue: the consensus estimate for revenue is expected around ~$16.2B (consensus) which represent a ↓ ~2.9% YoY.

The guided EPS range is $1.70 to $2.30 which indicate a broad range due to macro uncertainty.

DAL has beaten estimates in 2 of the last 4 quarters but missed in the other two.

Delta Air Lines (DAL) Last Neutral Earnings Saw Share Price Up 13.84%

Delta Air Lines last neutral earnings call on 09 April 2025 saw its share price up by 13.84% since.

Delta Air Lines reported strong revenue growth and operational performance, with significant achievements in premium and loyalty segments. However, the company faces challenges due to macroeconomic uncertainties and demand softness in the domestic market, particularly in the Main Cabin. While international revenue shows resilience, the uncertain economic environment and flat pre-tax earnings present concerns.

Delta Air Lines (DAL) Company Guidance

During Delta Air Lines' March Quarter 2025 Conference Call, CEO Ed Bastian discussed the company's financial performance and strategic direction. Delta reported pre-tax earnings of $382 million, or $0.46 per share, on revenue that was 3.3% higher than the previous year, marking a record for the March quarter. The operating margin stood at approximately 5%, and the company generated $1.3 billion in free cash flow.

Despite a challenging macro environment, particularly in the domestic Main Cabin segment, Delta's international and premium segments showed resilience. The company plans to maintain flat capacity growth in the second half of the year and expects double-digit operating margins with pre-tax income between $1.5 billion and $2 billion for the June quarter. Although Delta is not providing a full-year outlook due to economic uncertainty, it anticipates strong profitability and cash flow in 2025.

Key Drivers & Headwinds

🔺 Positives

• Premium & International Demand: High-margin international routes (Pacific, Latin America) and premium cabins now make up ~60% of revenue.

• Fuel Cost Tailwind: Oil prices fell ~6% in Q2, easing cost pressure.

• Dividend Confidence: 25% dividend hike to $0.1875/share signals strong cash flow discipline.

🔻 Pressures

• Soft Domestic Demand: Main cabin and corporate travel remain weak amid trade tensions and economic uncertainty.

• Labor Costs: Wage inflation expected to push salary expenses up ~13% YoY.

• Tariff Overhang: Trump’s tariff salvo may further dampen international travel and raise input costs.

Key Expectations and Themes:

Anticipated Decline in EPS and Revenue: The consensus among analysts is that Delta will report an earnings per share (EPS) of around $1.97 to $2.05, representing a decline of approximately 15.7% to 16.5% year-over-year from Q2 2024's $2.36. Revenue is also expected to decrease by about 2.9% year-over-year, to approximately $16.18 billion. This is largely attributed to factors like geopolitical uncertainties, tariff-related pressures, persistent inflation, and a general softening in air travel demand.

Geographic Performance Divergence: While overall revenue is projected to decline, there's an expected divergence in regional performance. The Pacific and Latin America regions are anticipated to be bright spots, with projected revenue growth of 8% to 9.4% and 4.4% to 6%, respectively, driven by pent-up demand for international travel. Conversely, Domestic passenger revenue is expected to be flat or slightly down, and the Atlantic region is projected to see a decline of 3% to 5.7%, likely due to transatlantic capacity cuts and geopolitical tensions.

Cost Management and Efficiency: Analysts are looking at Delta's Cost per Available Seat Mile (CASM) excluding fuel. In Q1 2025, this metric saw a 5.7% year-over-year decrease, and if this trend of operational efficiencies and labor savings continues, it could positively impact margins despite revenue headwinds. Delta's fuel hedge portfolio (covering around 60% of Q3 needs) is also seen as a buffer against volatile fuel prices.

Dividend Stability and Investor Sentiment: Delta recently increased its quarterly dividend by 25% to $0.1875 per share, signaling confidence in its cash flow and financial stability. This, combined with a strong dividend yield (around 1.47% to 3.5% depending on the source and stock price), is making DAL an attractive consideration for income-focused investors, particularly given its recent stock price dip year-to-date.

Potential for an Earnings Beat: Despite the expected year-over-year decline, some models (like Zacks Earnings ESP) suggest a positive surprise is possible, with a track record of beating estimates in some past quarters. The underlying resilience of the business, driven by premium travel and loyalty programs, could help it outperform conservative estimates.

Market Performance & Sentiment

Despite underperformance, analysts remain bullish — betting on Delta’s premium strategy and cost control to drive a rebound.

Delta Air Lines (DAL) Price Target

Based on 19 Tiger Brokers analysts offering 12 month price targets for Delta Air Lines in the last 3 months. The average price target is $59.88 with a high forecast of $88.00 and a low forecast of $36.77. The average price target represents a 18.53% change from the last price of $50.52.

Technical Analysis - Exponential Moving Average (EMA)

The momentum from RSI is still showing positive though it is building up and the bulls are still in control, there is a consolidation which might be signalling a breakout if the earnings beat estimate or even surprise.

I have taken a small position on DAL and will be watching how DAL would perform post earnings, as there have been some models suggesting that a positive surprise might be possible.

Summary

Delta’s Q2 earnings will likely reflect a tale of two cabins: strength in premium international offset by softness in domestic economy class.

Investors will be closely monitoring the actual reported numbers and management's commentary on demand trends, cost control, and the outlook for the remainder of 2025.

If management reaffirms full-year guidance and shows progress on cost control, the stock could re-rate higher, especially if oil stays low and tariffs don’t escalate further.

Appreciate if you could share your thoughts in the comment section whether you think DAL might give a possible positive surprise and the strong dividend yield might be something to consider for dividend play for income-focused investors.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.