Delta beats on Q4 earnings, sees more growth due to its ‘K-shaped’ higher-end customers
Delta Air Lines (DAL) posted upbeat fourth quarter results Tuesday morning, saying growth in the premium business, and lack of certain headwinds, would propel its business forward in 2026.
For the quarter, Delta posted record adjusted revenue of $14.61 billion against estimates for $14.67 billion, per Bloomberg consensus. The results were up 1.2% compared to a year ago, which was outside of the airline’s own 2% guidance due to the impact of the government shutdown.
Delta’s adjusted earnings per share (EPS) came in at $1.55, versus the $1.53 expected. The company’s earnings took a $0.25 hit from the government shutdown as well.
Looking ahead, Delta is projecting revenue in Q1 to grow by 5% to 7%, with operating margin in the 4.5% to 6% range and adjusted EPS of $0.50 to $0.90. For the year, Delta sees adjusted EPS of $6.50 to $7.50, representing a whopping 20% year-over-year jump at the midpoint, with free cash flow in the range of $3 billion to $4 billion.
The growth is driven by increased business from its premium-focused, higher-net-income clients.
“There’s a lot of discussion everywhere you go on the K-shaped consumer, and our consumer happens to sit right at the top end of that K, and as a result of that they are investing and prioritizing spending on travel, and the higher-quality experience which affords itself to premium experiences is what they’re seeking,” Delta CEO Ed Bastian said on a call with reporters, adding that 100% of the seat growth in Delta’s cabins are in premium, with none in its main, or economy, cabin.
In a K-shaped economy, the upper leg of the K represents higher-end consumers or industries benefiting from an economic recovery in a vastly different way than lower-end consumers or sectors that are experiencing negative growth.
Bastian said 2026 was off to a “strong start,” with top-line growth accelerating on consumer and corporate demand.
Bastian noted headwinds faced in 2025, such as “Liberation Day” tariffs’ effect on the economy and the government shutdown’s hit on the airline sector, are not expected this year.
“We generated $5 billion of pre-tax profit [in 2025] with a double-digit operating margin and record free cash flow of $4.6 billion, all the while navigating a challenging environment,” Bastian said.
The closely watched total adjusted revenue per available seat mile came in at $20.02 for Q4, down 0.1% compared to last year, but again Delta noted that revenue for the quarter was blunted by the shutdown.
Delta’s international business continues to be strong, with year-over-year growth in Q4 up 5%, driven by the Transatlantic and Pacific regions. Delta said 90% of its corporate clients (who take a high amount of international trips) expect travel to increase or remain steady in 2026.