Delta Air Lines Inc (DAL) — Q3 2025 Earnings Call Transcript

Thank you, Matthew. Good morning, and thank you for joining us for our September quarter 2025 earnings call. Joining us today from Atlanta are CEO, Ed Bastian; our President, Glen Hauenstein; and our CFO, Dan Janki. Ed will open the call with an overview of Delta's performance and strategy. Glen will provide an update on the revenue environment, and Dan will discuss costs and our balance sheet. After the prepared remarks, we'll take analyst questions. We ask you to please limit yourself to one question and a brief follow-up so we can get to as many of you as possible. After the analyst Q&A, we will move to our media questions. As a reminder, today's discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Some of the factors that may cause such differences are described in Delta's SEC filings. We'll also discuss non-GAAP financial measures, and all results exclude special items unless otherwise noted. And with that, I'll turn it over to Ed.

Thank you, Julie. Good morning, everyone. We appreciate you joining us today. This quarter's results reinforce that Delta's competitive advantages and differentiation have never been more evident. In the September quarter, Delta's revenue growth and earnings came in at the top end of our expectations, delivering performance that we anticipate will lead the industry across all key financial measures. Revenue grew 4%, led by premium, corporate, and loyalty, reflecting the power of Delta's brand, the financial strength of our customer base, and improving industry fundamentals. We reported pretax income of $1.5 billion and earnings of $1.71 per share with an 11.2% operating margin. Free cash was $830 million, bringing our year-to-date free cash flow to $2.8 billion. We generated a return on invested capital of 13%, 5 points above our cost of capital and in the top half of the S&P 500. Operationally, Delta once again led the industry on reliability and customer experience. Through a busy summer, our teams delivered for our customers, and I want to thank them for their outstanding work and dedication. Their professionalism and care create the trust that consumers have in the Delta brand. Sharing success with our people is core to our culture. We've accrued nearly $1 billion year-to-date towards next February's profit sharing because when Delta succeeds, so should our people. I also want to recognize the essential aviation workers, the controllers, TSA officers, Federal Air Marshals, and many others who are keeping our systems safe and secure during the ongoing government shutdown. Thank you for your professionalism and your commitment to the traveling public. We're hopeful that Congress will act to reopen the government as soon as possible. Now turning to our outlook. Our fundamentals are improving and positive momentum is continuing. Since July, travel demand has strengthened, led by a rebound in business travel, which was up high single digits in the quarter. The U.S. economy remains on solid footing, and our customer base is financially strong with rising preference for premium products and services. SkyMiles membership is expanding, particularly among younger consumers, and engagement is strong across all cohorts. Consumer spending on the Delta Amex co-brand card is up double digits year-to-date with a recent acceleration in travel and entertainment that mirrors the improvement that we're seeing in bookings. Premium revenue growth remains robust, and Main Cabin trends are improving. Structural change is taking hold across the industry as unprofitable flying is rationalized and carriers not earning their cost of capital adjust strategies to prioritize returns. Against this backdrop, we expect to deliver a double-digit operating margin again in the December quarter with earnings comparable to what we earned in the September quarter. This would be at or above our all-time fourth-quarter earnings performance. This brings our outlook for full-year earnings to approximately $6 per share, which is in the upper half of our July guidance range. Free cash generation remains a key differentiator for Delta, and we are updating our full-year outlook to $3.5 billion to $4 billion, growing our cash generation over last year, and consistent with our long-term framework as we build a fortress balance sheet. At the heart of our position of industry leadership is a relentless focus on elevating the customer experience. We're investing across every phase of the journey to make travel with Delta more seamless, personalized, and premium, growing our value proposition to customers. On the ground, we're harvesting the benefits of generational investments in our airport infrastructure. This includes upgraded airport facilities, modernized Sky Clubs, the launch of Delta One Lounges in JFK, LAX, Boston, and Seattle. By year-end, Delta One check-in will be available across all of our hubs. We've also partnered with Uber to begin streamlining the airport pickup and drop-off experiences, enhancing convenience from curb to gate. In the air, we're continuing to expand premium seating and enhance service offerings, ensuring more customers can experience our most elevated products. Digitally, we're delivering a connected experience for SkyMiles members with nearly 1,000 aircraft equipped with fast free WiFi, well more than all of our U.S. competitors combined. Our integrated platform is setting the standard for in-flight connectivity and personalization. Exclusive partnerships with American Express, Uber, and most recently, YouTube extend SkyMiles further into our members' daily activities, deepening engagement and preference for the Delta brand beyond the flight. And it's all powered by our people, delivering welcomed, elevated, and caring service that reinforces our industry leadership, sustains our durable revenue premium, and underpins our strong financial foundation. In closing, our financial focus remains on profitable growth, margin expansion, and disciplined capital allocation, all aligned with the 3- to 5-year framework that we shared last November. As we enter the final stretch of our Centennial year, I'm more optimistic than ever about Delta's future. Thank you for joining us today. And with that, I'll hand it over to Glen to discuss our commercial trends and demand, followed by Dan with the financial details.

Thank you, Ed, and good morning. I want to begin by thanking the Delta team for their outstanding commitment throughout the busy summer season and to our customers for their continued loyalty to Delta. For the September quarter, revenue increased 4.1% year-over-year to $15.2 billion, a third-quarter record and ahead of our guidance as momentum built through the quarter. Trends across our business are improving, and customer preference for the Delta brand is showing up in our results. Total unit revenue improved by 0.3% over last year. Importantly, domestic unit revenue turned positive with sequential improvement as the quarter progressed. This was supported by a Main Cabin inflection as industry supply moderated and demand improved, materializing earlier than our initial expectations. Internationally, profitability across all entities was strong with premium continuing to bolster results. Corporate sales trended positively throughout the quarter, up 8% over the prior year with sequential improvement across all sectors. Domestic corporate sales grew double digits, including mid-teens growth in our coastal hubs. We see opportunities for further growth as corporate confidence rebuilds, reinforced by 90% of our most recent corporate survey respondents anticipating that their 2026 travel volumes will increase or remain steady year-over-year. Diverse high-margin revenue streams grew double digits year-over-year and contributed 60% of total revenue. Within that, premium revenue grew 9% with improvement across all products driven by strong demand and consistent investment in premium offerings. Loyalty revenue improved 9%, and travel-adjacent products grew mid-teens as SkyMiles members engage beyond the flight and throughout our loyalty ecosystem. Cargo revenues increased 19%, driven by the Pacific. Maintenance, repair, and overhaul revenue grew more than 60% on higher volumes and timing of shipments. Delta's loyalty ecosystem continues to be a powerful driver of enterprise value, anchored by the attractiveness of the SkyMiles program, a financially healthy, highly engaged member base, and our exclusive co-brand partnership with American Express. Co-brand holders are among our most valuable customers, traveling more often and spending more on Delta. While roughly one-third of active SkyMiles members hold a co-brand card today, we have further runway as both engagement and member penetration continue to rise. A key proof point is the sustained momentum on spend growth, which has outpaced other consumer credit cards by 2x over the last few years. During the quarter, spend grew at a double-digit pace with new card acquisitions up year-over-year and a record mix of customers choosing the premium cards. With that, remuneration from American Express increased 12% over the prior year to $2 billion in the quarter, keeping us on track to deliver over $8 billion this year and advancing towards our long-term goal of $10 billion within the next few years. Turning to the outlook. The environment continues to improve. Over the past 6 weeks, sales trends have accelerated across all geographies and in every advanced purchase window, positioning Delta to close the year from a position of strength. While we are monitoring potential impacts from the U.S. government shutdown, we have not seen a material effect to date. For the December quarter, we expect total revenue to grow 2% to 4% year-over-year on top of last year's record performance with solidly profitable unit revenues. Passenger RASM is showing healthy improvement sequentially, reflecting continued strength in domestic and a step-change improvement in the transatlantic on firmer Main Cabin trends and corporate demand. At the same time, financial divergence across the industry has never been greater. As carriers prioritize earnings, their cost of capital, and eliminate unprofitable flying, competitive capacity in our hubs is down year-over-year, and we expect a very healthy supply-demand balance across the industry into 2026. In closing, I'm very optimistic as we enter the final quarter, building our momentum and positioning Delta for continued top-line growth and margin expansion into 2026. And with that, I'll turn it over to Dan to cover the financials.

Thank you, Glen, and good morning to everyone. Delta's competitive advantages drove another strong quarter as we continue to set the pace for the industry. Our teams are delivering operationally for our customers and driving efficiency. Year-to-date, we are outperforming the industry across on-time performance, completion factor, and Net Promoter Score. Our premium offerings, industry-leading loyalty programs, and the elevated experiences we provide across the entire travel journey are driving increased customer preference for flying Delta and underpin our differentiated financial results. In the September quarter, we delivered record third-quarter revenue of $15.2 billion, with an operating margin of 11.2% and earnings of $1.71 per share. Non-fuel unit cost growth was approximately flat to prior year, bringing the year-to-date non-fuel unit cost growth to less than 2%, consistent with our low single-digit guidance at the start of the year, even as we've reduced capacity after the summer peak to align to demand. I want to thank the entire Delta team for their hard work to achieve these results. Delta generated third-quarter operating cash flow of $1.8 billion. And after reinvesting $1.1 billion into the business, we generated free cash flow of $830 million. On our capital structure, we continue to take an opportunistic approach. Last month, we successfully repriced our SkyMiles term loan, reducing the rate by 225 basis points, demonstrating the strength of our balance sheet and the attractiveness of Delta Credit. Strong cash generation is able to debt paydown of nearly $2 billion year-to-date with gross leverage ending the quarter at 2.4x. Now turning to the outlook. For the December quarter, as Glen shared, we expect revenue growth of 2% to 4% year-over-year with positive unit revenue. On the cost side, disciplined execution supports non-fuel unit cost growth in low single digits, in line with our full-year guidance. With that, we expect fourth-quarter earnings of $1.60 to $1.90 per share and an operating margin of 10.5% to 12%. For the full year, this brings earnings per share of approximately $6, in the upper half of our guidance range we provided in July. On free cash flow, we are updating our guidance to $3.5 billion to $4 billion. This outlook is within our long-term target range, enabling us to pay down debt while returning cash to shareholders. Our capital allocation priorities remain unchanged, reinvesting where returns are strong, reducing debt, and maintaining our fortress investment-grade balance sheet, which was recently recognized by Fitch with a revised outlook from stable to positive during the quarter. Our investments are focused on the customer experience, as Ed and Glen spoke about, and on driving efficiency through technology and our fleet. We continue to advance our fleet renewal strategy with approximately 40 aircraft deliveries this year and next. These additions drive meaningful value for our customers through expanded premium seating and for our shareholders through increased efficiency and greater scale among our key fleets. Looking into 2026 and beyond, our focus is on profitable growth and delivering long-term financial targets outlined at our Investor Day last November, including earnings growth, durable free cash flow, debt repayment to drive sustained value for our shareholders. In closing, I want to extend my sincere thanks to the entire Delta team for their commitment to one another and to our customers. And with that, I'll turn it back to Julie for Q&A.

Thank you, Dan. Matthew, can you please remind the analysts how to enter the call queue and go to our first question from Duane Pfennigwerth of Evercore ISI.

With respect to the strong improvement in cash flow year-over-year and operating cash flow, can you just expand on the drivers of that improvement? How much of that is just the working capital benefit of maybe the booking curve normalizing versus earlier in the year? Maybe there are some dynamics around MRO. Any thoughts you have would be helpful.

Yes. Certainly, Duane, thank you for the question. Year-to-date, we're on track to where we were last year on similar earnings. And that's even with actually a headwind as it relates to the booking curve. As we talked about over the summer that spring and summer that compressed. It's starting to expand. We haven't yet gotten all that back. We expect more of that to materialize here in the fourth quarter. And the underlying improvement to offset that is coming out of working capital. We built up a lot of just excess as we were rebuilding the airline. And now is our time as we drive efficiency to work that off, and you're seeing that in working capital.

And then maybe, Glen, for my follow-up, one of the questions we got from a generalist this morning was, can you put the corporate recovery in context, excluding any benefit from a CrowdStrike comp? In other words, are we fully back? How would you put this corporate recovery in context?

Yes. I think we're well beyond where the CrowdStrike impact was from last year, and we're seeing similar results to what we disclosed in the third-quarter earnings moving into the 4Q. And I'd just remind you and other people on the call that while corporate revenues have recovered to 2019 levels and are actually slightly above those now, that the number of passengers that are booking because fares are higher are still in the high 70s. So we think as business continues to normalize, we have a lot of runway to continue to expand the corporate demand.

I was wondering if you could unpack the improvements you're seeing in the domestic market and how much that might be unique to you just given your exposure to higher income households.

Well, certainly, I think our exposure to higher household income cohorts has enhanced our relative position versus carriers that are catering to a more stressed lower to middle income environment. So we'll see as everybody else reports. I can only speak for Delta and the strength that we've seen and continuing to accelerate as we head into the fourth quarter.

Okay. That's really helpful. And then just kind of on the same topic, I was wondering if you could unpack some of the mix shift benefit that you might see as we move into 2026 and 2027 as you take on delivery of new aircraft.

Well, we continue to invest in the higher-end products, whether or not that's opening up new Delta One lounges or check-in areas, and so as we continue to take delivery, they come with a higher mix of premium products, and if you look next year, well, we haven't given any guidance, but most of our growth, if not almost all of it, will be in the premium sectors.

Maybe one for Dan. Not asking for 2026 guidance, but this year, your unit cost performance benefited from efficiency gains from growing into your workforce and your fleet and your airport assets. I guess what inning are we in, in that efficiency growth? And are there further tailwinds from this into next year?

Yes. We talked a bunch about this at the Investor Day last November, and those all those trends are intact. We certainly are still in the early to middle innings where we believe over the long term, we can continue to drive efficiency by growing into that workforce, continuing to get growth in the generational airports that we've built that are actually in our run rate. The investment that we've made in fleet as we get scale and efficiency as we continue on the fleet renewal. And then the other element that we talked about is just the role of technology and that it will have in regards to enabling our workforce and giving them tools and transparency to just be more efficient. And we think that is certainly in the very, very early innings of the unlock, and we have years of that in front of us.

Okay. That's great. And then my second one is actually a bit of a follow-up to Tom's. I wanted to dig in a bit on domestic Main Cabin turning positive specifically. Can you give a little more color there? I know one driver of that is that domestic Main Cabin seats for Delta are down year-over-year. Can you tell us by how much? And then maybe the converse of that, I know back in August, when I was in Atlanta, we spoke about how you're adding, you're doing some retrofits to add incremental Delta Comfort seats this year. What does this year's retrofits do for premium seat mix into next year? I know you said most of next year's growth driven by premium seats, but just wondering specifically how the retrofits contribute to that as well.

Certainly, the premiumization of the Delta ecosystem relies on two key factors. The first is the retrofits, which account for about 25% to 30% of the additional premium seats. The second is the ongoing delivery of new aircraft that come with a higher proportion of premium offerings. Both of these factors contribute to enhancing the experience for our customers. Regarding Main Cabin demand, we have observed a shift. While our Main Cabin seats have decreased slightly compared to last year, the decline is not significant, remaining relatively flat. However, we have noticed a rationalization of capacity in many of our hubs. In fact, if you look ahead to November, capacity in nearly all of our hubs has decreased year-over-year compared to competitors, allowing us to optimize the available seats and continue to increase unit revenues.

So for Glen, premium revenue growth exceeded that of Main Cabin by 13 points. That's obviously a new record. And I guess my question is a bit of a follow-up to Catie's. I mean, obviously, part of the outcome is driven by weakness in the low-end consumer. But can you drill down a bit deeper into actual changes in consumer behavior? So for example, if you looked at SkyMiles member behavior, how much premium growth is driven by your more affluent members taking more trips versus maybe less affluent flyers trading up to a better experience. There seems to be so many moving pieces to explain the 9% rise in premium, the 4% contraction in Main. We obviously know the outcome is great, but any further comment on the specific building blocks would be helpful.

Well, Jamie, we've been discussing for several years that we believe premium offerings have significant growth potential. Historically, we weren't selling premium seats 10 or 15 years ago; instead, we were giving them away. The redesign of the purchasing process has made these seats more affordable and accessible, allowing more people to move into those categories. We have always acknowledged that we are not at the final stage of fully optimizing our distribution systems to ensure that these products reach consumers and agencies effectively, which has been a lengthy process. Yes, it has been a transformation, and it is indeed true that customers are increasingly opting for these products, leading to a very high repeat purchase rate. In previous calls, I've compared it to upgrading your car; most people wouldn’t downgrade once they’ve had a better experience. Once customers start traveling in premium products like Comfort+, Delta Premium Select, or Delta One, they tend to stick with them, with retention rates in the mid-80s. The intent to repurchase is very high, and we are continuously expanding the availability and pricing of these products. This journey will take time, but I believe we will see many more opportunities in the premium segment in the years ahead.

Jamie, I'd like to add a few things. It's important to consider the geographies involved. The investments we've made in Los Angeles, Boston, New York, and the coastal development in Seattle have positioned us well in markets where a significant amount of premium travel exists. Historically, Delta hasn't had as strong a presence in these markets, but we've made strides by creating excellent experiences at the airports, including the Delta One lounges. Corporate travel is our main focus, and we excel at catering to it, as it is tied to premium offerings. There's a lot to unpack in your question, but we are seeing a strong momentum in the premium segment, and customers frequently ask us when we can provide more options.

And that actually leads to my follow-up. What does the Venn diagram look like between premium and corporate? So if JPMorgan buys me a Main Cabin ticket to Miami, that's clearly going to show up as corporate for you. It's going to be on our discount. But if JPMorgan buys me Delta One to Los Angeles, I guess that counts as both corporate and premium.

Yes.

So could you quantify sort of what that overlap?

It's likely between 30% and 40%. We can obtain the precise figure, and this is an exciting development for us. In the past, there was a significant disparity between yields on corporate and high-yield leisure, and it created a challenging situation if our planes weren't filled with corporate travelers. Now, those yields have aligned, and in some cases, personal leisure yields are currently exceeding corporate ones. This shift has afforded us a better opportunity to manage our capacity. One challenge we've encountered is running low on seats for corporate travelers and needing to increase our market supply because corporate demand is being overshadowed by higher-yielding leisure options.

Excellent, and if I could just squeeze in a third follow-up just because you brought that point up. You had said 2027 was the year in which premium would overtake Main Cabin. Any reason we wouldn't see that occur in a quarter or two next year?

I think you will.

Glen, you had a chance to talk about your first car. I think it was the Rambler. I think you referenced that a couple of months ago.

Rambler Classic.

Let's focus on the premium discussion, as it appears there is still a significant underappreciation for the developments taking place. The revenue growth for premium compared to Main Cabin has been exceptionally strong for a while now. I would appreciate it if you could discuss the profitability of the different cabin segments. Should we consider the growth gap overall as a suitable benchmark for understanding the differences in overall contribution? It seems like there is an anticipated shift in seat mix, which may also indicate a forthcoming change in profitability. Could you provide insights into the profitability aspects of the segments? That would be helpful.

I just think that when you think about what's different and what's changed over the last 10 or 15 years, the premium products used to be loss leaders, and now they're the highest margin products. That's really the headline. And really in descending order of the premiumness is their margin. So the best margins are in the most premium products and you just work your way down. Now we've had some convergence on Delta Premium Select, which has actually been so popular as we've introduced it that the margins are starting to converge with Delta One, and we're working on separating those back out again, but really exciting opportunities. These are relatively new products for the airlines. We've only had them and we've only been selling them, and we've only been selling them in widely available distribution for less than 10 years. Well, first of all, I'd like to call out our sales team there, the best sales team in the industry, do an amazing job for us. And clearly, we are continuing to take share on the margin. So we monitor our share and then we reconcile it later. But I think we're seeing mild gains in total share and certainly higher gains in revenue share. But yes, there's a lot of opportunity as we look forward here is that corporations are still not traveling in the volumes they did pre-pandemic. And so as that travel continues to come back, and I think we could look at third-quarter sales and take the CrowdStrike out of it, we're still in the double digits.

I think what I'd add on corporate because I've heard it a couple of times is that somehow it might be driven by CrowdStrike. Actually, that 8% September was higher than 8%. It was 9%, and that didn't have CrowdStrike in it. So I think there's real momentum here with corporate. It's across all the segments. This hasn't anything to do with the technology outage.

Yes. One other thing, Conor, I'd add is corporate suspended travel in the early part of the year. So there was also some level of pent-up demand to get back out. And I don't think you can underestimate that. I don't see that stopping, by the way, because our outlook when we ask the corporates, they're going to continue to grow. But there was clearly for 4 or 5 months this spring, we were not seeing any corporate growth, and then they all got back on the road together at the same time.

Maybe, Glen, maybe switching gears a little bit and speaking about Atlantic here. Obviously, RASM down 7% in 3Q. I know you spoke about a step function change happening here, but I kind of doubt you're expecting to get back to flat in 4Q. But maybe could you speak to how Atlantic performed throughout 3Q and kind of what you need to see in order for that entity to climb back to flat unit revenue?

The third quarter was definitely disappointing, and this was due to a variety of factors. Some of the issues were self-inflicted, especially regarding our expectations around booking trends and our decision to hold out for higher fares. Moving forward, we plan to be more proactive in securing bookings earlier in the year. Additionally, there was the spring slump that Ed mentioned, which caused anxiety when tariffs were introduced and affected bookings for the late summer. Furthermore, as we’ve noted before, our premium product customers are primarily in their 60s, and fall has become a more appealing season than summer for high-yield leisure travel. So, it’s a combination of these elements. Next year, we will take a multi-faceted approach to address this. Our goal is to avoid any significant drop in demand, be more assertive in filling Main Cabin bookings earlier, and adjust our capacity to prevent overburdening our resources in July and August, aiming for a more balanced capacity distribution throughout the summer season.

I wonder if you could share what you're seeing on the Latin America side, perhaps kind of broken out by international and long haul?

Latin America, long haul, short haul.

Yes. Long haul has been very solid for us. It comes into season in the winter. It's looking for a very good strong winter season. Short haul has been a mixed bag. Caribbean doing well. Mexican beach is under a little pressure, but all still very profitable for us. So continuing to make investments in those regions.

Savi, I apologize, we weren't able to hear you clearly on this side. I know it's related to 2026, but I couldn't hear the context of the question. Could you repeat it?

Yes. Sorry about that. Just on the maintenance side, do you expect 2026 to have kind of more or less heavy maintenance events? And beyond the events, just on inflation, just what are you seeing on the maintenance and parts? And is that improving from kind of high level?

Yes. We're still in the early stages of our planning for 2026. So we haven't finalized our capacity and maintenance details yet. We'll share more as we progress through the fall. Regarding inflation, it's still a factor in the supply chain, affecting material availability and repair components, with inflation rates above the norm. However, things are starting to improve as the industry recovers, but there's still much work to be done. This segment of the supply chain is expected to take several years to fully stabilize. The turnaround times and performance are not yet back to the levels we experienced in 2017, 2018, and 2019. As these improve and become healthier, we anticipate greater efficiency.

So the fourth-quarter earnings guidance is basically the same as Q3 earnings, and we've never really seen that before, I guess, if you exclude CrowdStrike last year. I guess I'm trying to understand, do you think this is just the new seasonality that makes Q4 a lot stronger? Or would you say maybe that you under-earned in Q3 and maybe it's some of both. I think the implications for how to think about next year would be different based on how you think about that dynamic.

Yes. The fourth quarter is expected to perform at least as well as the third quarter, driven by strong demand for premium services and an uptick in corporate travel. We are experiencing a lengthy season. Last year, we had the election, and activity slowed in the lead-up to it, resuming post-election. The calendar also provides some advantages this time around. Overall, as long as business travel continues, I believe the fourth quarter will be a robust period for us. Additionally, in the third quarter, especially for transatlantic travel, we aim to improve upon next year's performance, as we see opportunities to enhance our results.

The long-term Maintenance, Repair, and Overhaul growth will be noticeable, but you won't see it consistently exceeding 60% every quarter. Both the second and third quarters were strong for MRO this year, and it's more realistic to expect growth in the 20% to 30% range. However, we hope for sustained MRO growth that significantly outpaces the core airline growth and achieves double-digit figures. That said, you won't see growth at those high levels continually. The fourth quarter is likely to be closer to flat compared to the previous year.

And on cargo, we had a great third quarter thanks to our cargo team who did an excellent job. As we move into the fourth quarter, we've noticed some fluctuations, and we will see the final outcome. However, I don't anticipate the 19% growth to be sustainable in the fourth quarter; it will likely decrease from here. Despite this, we can still expect some growth in cargo.

Glen, maybe a couple of follow-ups to your earlier comments kind of specifically focused on 1Q. Can you help us understand how you're thinking about 1Q network planning just given all the continual noise that continues to be out there and also what happened last year with the kind of close-in weakness and corporate and everything else. Are you treating last year as a one-off? Or are you kind of being more cautious going into next year because of that?

I think we're going to head into 1Q the same way we're exiting 4Q, which is with a very strong backdrop, and the quarter we know the most about is the quarter we're in and the quarter we know the least about is the fourth quarter of next year. But as the first quarter comes into focus, the demand is looking quite robust. And so let's hope that, that spring swoon doesn't occur again next year.

Maybe this one is for Ed or Dan, but you guys, I think, in your prepared comments talked about your long-term goals of margin improvement. And I think everyone would agree on this call that airline stocks could be pretty cheap, but maybe margin growth would really be welcomed for investors. So I guess in that context, what is in your control here as you look into 2026? I'm not necessarily looking for guidance, but does it just have to be a market that's growing capacity a lot less than we have in the past few years? Or is it all these things that we're talking about on the commercial side that just gain more momentum? And what can you do on the cost side as well? I think Dan was just hinting at efficiencies there too.

Certainly. I appreciate your question and would like to refer back to our discussions from last November. We outlined several Delta-specific strategies that we can control as we move forward. Our goal is to elevate our margins into the mid-teens, and we believe our strategies and priorities will help us achieve this. This begins with expanding our high-margin revenue streams at a faster rate than our core offerings, with a focus on premium services. We've noted the growth in premium seating and the acceleration of our Main Cabin offerings. Strengthening our relationship with Amex and enhancing customer loyalty are also key factors contributing to our top line. Additionally, our fleet renewal process supports this initiative, and we aim to maintain strong cost management with low single-digit growth. This involves optimizing airports within our existing operations and streamlining our fleet for greater efficiency. In the long term, we plan to increase efficiency across our workforce and supply chain, leveraging technological advancements. Our goal is to progress steadily over time. Of course, the overall industry environment could also positively influence this, particularly if supply and demand remain balanced, presenting further opportunities for margin growth beyond what we can directly control.

I believe the growth has been driven by two main factors. First, there's the premiumization of our card offerings. We've been adding a record number of premium cardholders, whose spending significantly exceeds that of our regular base members. Even though we have consistently acquired over a million new members for seven years, the composition of these new members is increasingly focused on a premium demographic. These premium customers typically have higher credit scores, leading to higher approval rates and more spending on their cards. This trend has been a major driver for us, not only in total volume but also in the number of premium cards we're acquiring. This growth has consistently outpaced total card spending, and we aim to maintain this momentum through 2026.

Could you provide some additional insight regarding your projection for 2026? You're indicating that you'll align with your multiyear outlook, which suggests around 10% earnings growth. Do you anticipate achieving low single-digit revenue growth in the Main Cabin, or should we consider that reaching this multiyear growth is primarily supported by the strong visibility you have on premium offerings and other factors, rather than a significant increase in Main Cabin revenue?

I believe we have already observed a change in the Main Cabin, which is very encouraging for us. The trends we see today are likely to continue at least through early 2026. Therefore, I anticipate that Main Cabin will improve as part of our revenue expectations for 2026. Additionally, we expect continued growth in our premium products and card spending. I am indeed thrilled about the progress we have made in the Main Cabin.

David, this is Ed. I'll take that. We haven't given '26 specific insights yet nor have we completed our planning process. So we'll probably be better equipped to talk about that towards the end of this year or early next year. But no question, we saw some pretty strong headwinds that came quite abruptly, hit us in late January, early February. We had the aircraft incidents, which certainly hurt revenue growth in some important markets. You had a lot of the trade uncertainty, you saw consumer confidence plummeting. And to the point where Delta, as you recall, we wound up pulling our guide, there was so much uncertainty for a short period of time. So no question, we have some tailwinds as we look forward into the new year, and if today's environment projects into '26, I think '26 is going to be a really strong year.

Thank you, Julie. Matthew, as we transition from the analysts to members of the media, if you wouldn't mind please describing how best to enter into the call queue and the process for follow-up.

We've seen Amex, Chase and some others raise credit card fees. Just wondering if you see any pushback from customers in terms of acquisitions on your end if you think that credit card annual fees at least can keep going up? And then my second question, also seeing really long upgrade lists, which I guess would be good for you guys because you have a lot of elites, not just on your airline, but others. And curious how you're managing that and if the percentage of paid seats in premium has gone up since the last time you've updated everybody.

in card fees, but we also injected a lot of value for customers, and we had a record acquisition in that this year. So we're very pleased with the results. I can't really comment to the results of Amex or Chase. But I would say, as long as you're providing more value to the customers, it seems like a pretty safe bet that there's going to be strong demand for those premium products across the spectrum. And in terms of our standby list, yes, there's a long standby list, and we have a lot of premium customers. And that's one of the reasons we've expanded our Comfort+ offerings because our most elite customers are allowed to upgrade into those products at time of booking, and we didn't have enough of those. If you look across the spectrum, we were generally sold out of Comfort+ early in the booking curve and now being able to increase that so we can accommodate more of our most premium customers with premium offerings at the time of booking.

In your forecast for transatlantic travel, I'm wondering if you still expect that to be mostly driven by U.S. point of sale? And do you see a rebound from non-U.S.-based customers?

It's always been U.S. point-of-sale driven. And so the question is how U.S. point-of-sale will it be? And our point-of-sale revenue on our revenue, we're approaching 80% U.S. point of origin. So yes, that we hope that there's going to be more. The dollar, of course, has strengthened. That makes coming to America more of a bargain for customers. And so hopefully, we see that translate into a little bit higher European point of sale, but we are mostly a U.S. point of origin driven company. There are definitely safety concerns and various issues related to travel to the U.S. However, we believe we still have a strong product, attractive cities, and connections to family and friends that will drive demand. The key question is how much demand there will be. The positive aspect for us is that we are not entirely reliant on this segment as it is not our main focus. I anticipate that next year will show some improvement over this year for European point of sale, particularly since the increase in the euro has made European fares more appealing.

And Mary, this is Ed. The conversation, it's also on the margins, right? It isn't as if Europeans have stopped traveling. They're still traveling in large numbers. The numbers may be down 5%, 7% in some of the markets. We're long term, we think our business model is very healthy for global expansion, and you're going to continue to see us pursue that.

I was just curious, there's some talk about the industry sort of bifurcating Delta and United on one side doing very well and then sort of the rest. And I guess, do you agree with that assessment? And then if so, is it structural? Is it a sort of industry phase? Just sort of curious to get your sort of sense of what's happening.

It's clearly happening. If you look at the results this quarter, as I mentioned on CNBC this morning, we expect 60% of the overall industry profits to be driven by Delta. I expect the rest of it probably to be driven by United largely. And then you have everybody else. And this is not a new phenomenon. This has been happening really since COVID hit over the last 4 or 5 years. There's a lot about the industry fundamentals that have changed that we at Delta are driving a much higher level of quality experience, whether it's reliability, whether it's the product and services that we offer, whether it's the partners we're bringing to the table, whether it's the expansion internationally. And if you are in a category that is seen as more of a commodity purchase, they're having a very difficult time. Their cost structures have increased as labor costs have gone up. It's been very difficult to get airplanes to get supply growth. Those lower-end models depend on high growth, and there's a lot of congestion in the U.S. marketplace in terms of the sky. So I think the bifurcation you're seeing is going to continue. And eventually, there will need to be rationalization to enable the lower end of the price spectrum to continue to sustain itself to be able to continue to attract capital, and I think we're seeing this all play out right in front of our eyes.