Delta Air Lines, Inc. (DAL) FY2025 10-K and Q3 FY2026 10-Q Summary

Business

Source: 2025 Form 10-K, accession 0000027904-26-000013.

Delta is a U.S. network airline that sells scheduled passenger air travel, and the cargo space on those flights, to leisure, corporate and loyalty customers across a global route system. Of $63.4 billion of 2025 operating revenue, $51.8 billion was passenger revenue: $23.4 billion of main-cabin tickets, $22.1 billion of premium-product tickets (Delta One, First Class, Delta Premium Select and Delta Comfort+), $4.2 billion of loyalty travel awards and $2.0 billion of travel-related services such as baggage fees. The remaining revenue came from cargo ($900 million) and "other" revenue ($10.7 billion), which includes $5.1 billion of refinery sales to third parties, $3.4 billion of loyalty-program revenue (chiefly brand usage sold to partners within SkyMiles miles), ancillary businesses of $937 million (MRO and Delta Vacations) and $1.3 billion of miscellaneous items such as lounge access and codeshare settlements.

Delta reports two segments:

• Airline, a single business unit covering scheduled passenger and cargo service, the SkyMiles loyalty program and ancillary businesses. It produced $58.3 billion of segment revenue and $5.7 billion of operating income in 2025.
• Refinery, Monroe Energy, a wholly owned subsidiary that operates the Trainer refinery near Philadelphia. The refinery has capacity of roughly 200,000 barrels of crude per day and supplies roughly 75% of the airline's jet fuel consumption, through its own jet fuel output and through the exchange or sale of the gasoline and diesel it also produces. It earned $157 million of operating income in 2025 on $7.0 billion of segment revenue. Delta owns it to capture the refining margin built into the price of jet fuel and to secure supply to its New York hubs.

Network and fleet. At the end of 2025 Delta offered up to 5,500 peak-day flights to more than 300 destinations on six continents and served over 200 million customers in the year. Its domestic network runs through core hubs in Atlanta, Detroit, Minneapolis-St. Paul and Salt Lake City, which the company describes as having strong local share, high loyalty penetration and strong margins. Coastal hubs in Boston, Los Angeles, New York-LaGuardia, New York-JFK and Seattle add large revenue markets, premium demand and international gateways. The fleet totalled 1,314 aircraft at December 31, 2025: 989 mainline aircraft (average age 14.8 years) and 325 regional jets flown under the Delta Connection brand by Endeavor Air (a wholly owned subsidiary), SkyWest Airlines and Republic Airways. Most regional flying is done under capacity purchase agreements, so Delta controls scheduling and pricing and keeps the revenue. Approximately 103,000 full-time-equivalent employees worked at Delta at year-end 2025, and about 20% of them were unionized, primarily pilots.

Loyalty and the American Express relationship. SkyMiles is the economic core of Delta's non-ticket revenue. Delta sells miles to partners, most importantly American Express through the co-brand credit card. Remuneration from American Express was $8.2 billion in 2025, up about 11%, and the company expects it to reach $10 billion over the next few years. Total cash sales from loyalty marketing agreements were $8.0 billion in 2025, against $7.4 billion in 2024. In 2025, 12% of revenue miles flown on Delta were award travel, covering about 35 million award tickets. The SkyMiles deferred revenue balance was $9.3 billion at year-end 2025.

Diversified revenue streams. Management's strategy is to make air travel less of a commodity by growing high-margin streams alongside main-cabin fares. Those streams are premium cabins, where yield growth has outpaced main cabin; the American Express co-brand; Delta TechOps third-party maintenance, repair and overhaul (MRO), with 2025 revenue of $822 million, up from $658 million; cargo; and Delta Vacations.

International partnerships. Delta runs four antitrust-immunized joint ventures or cooperation agreements, each backed by an equity stake:

• Transatlantic, a joint venture with Air France-KLM and Virgin Atlantic. Delta owns 49% of Virgin Atlantic and about 3% of Air France-KLM.
• U.S.–Mexico, a joint cooperation agreement with Aeroméxico, in which Delta holds about 19%. The DOT terminated this agreement's antitrust immunity in a September 15, 2025 final order. The Eleventh Circuit stayed that order on November 12, 2025 pending judicial review, and the airlines continue to operate under the agreement.
• North–South America, a joint venture with LATAM, in which Delta holds about 11%.
• U.S.–Asia, a joint venture with Korean Air. Delta owns just under 15% of Hanjin-KAL, Korean Air's largest shareholder.

Delta also holds about 2% of China Eastern. In October 2025 it bought a 12.7% stake in WestJet for $276 million, alongside a commercial cooperation agreement covering U.S.–Canada traffic. Delta is a member of the SkyTeam alliance.

Financial foundation. Delta is rated investment grade by all three major rating agencies; Moody's upgraded it to Baa2 in February 2025. It has made debt reduction a stated priority. Employees share in results through a profit-sharing plan that pays 10% of the first $2.5 billion of annual profit and 20% above that. Profit sharing for 2025 was $1.3 billion, paid in February 2026.

Risk factors

Source: 2025 Form 10-K, Item 1A, accession 0000027904-26-000013. The September 2026 Form 10-Q reports no material changes to these risk factors.

Delta's risks split between company-specific exposures and industry-wide ones. The most consequential are:

• Fuel price and supply. Fuel was 17% of 2025 operating expense, against 19% in 2024 and 21% in 2023. Between 2023 and 2025 the average monthly price ranged from $3.22 a gallon (October 2023) to $2.20 (August 2025). Purchase contracts are index-priced and give no material protection against increases. Because tickets are sold well ahead of travel, a rapid fuel spike may not be recoverable through fares. A one-cent-per-gallon increase adds about $40 million of annual expense on roughly four billion gallons of consumption. This risk materialized in 2026 (see the current-quarter section below).
• Refinery concentration. An unplanned outage at Monroe's Trainer refinery would disrupt a major source of jet fuel and erase the refinery's financial benefit. Refinery hazards (fires, explosions, toxic emissions) may exceed insurance coverage. Because Monroe can blend only small amounts of renewable fuel, it must buy most of its Renewable Identification Numbers (RINs) on the open market, and their prices are volatile; RIN compliance cost $312 million in 2025, up from $203 million in 2024. A refinery outage that began in mid-June 2026 did reduce refinery results in the September 2026 quarter.
• Technology and cybersecurity. The July 2024 CrowdStrike outage caused about 7,000 cancellations over five days, roughly $380 million of lost revenue and about $170 million of extra expense. It shows how an IT failure, including one at a vendor, can halt operations. Data breaches could bring regulatory fines, litigation and reputational harm. New AI-based tools may not perform as intended.
• Partner airlines and equity stakes. Delta depends on joint-venture partners, regional carriers and other third parties it does not control. Its foreign airline stakes carry impairment and mark-to-market risk; equity investments held at fair value were $3.6 billion at year-end 2025, and a 10% change moves results by about $360 million. Antitrust immunity is subject to regulatory review, as the Aeroméxico order shows.
• Debt covenants. Credit facilities and the SkyMiles financings contain minimum coverage ratios. A breach could trigger early amortization, extra collateral or cross-defaults. The SkyMiles financings also limit changes to the loyalty program that could impair repayment.
• Labor. About 20% of the workforce, primarily pilots, is unionized under the Railway Labor Act. Monroe's roughly 200 refinery employees fall under the National Labor Relations Act, which permits strikes after a contract expires; their agreement ran to February 28, 2026. Labor disputes at regional partners could also disrupt Delta's network.
• Seasonality and earnings volatility. Demand peaks in the June and September quarters. Fair-value swings on equity stakes in other airlines produce large non-operating gains and losses: a $1.2 billion gain in 2025 and a $319 million loss in 2024.
• Competition. Delta competes with network carriers (American, United), national point-to-point carriers (Alaska, JetBlue, Southwest) and ultra-low-cost carriers, as well as rival alliances and foreign carriers on international routes.
• Airports, air traffic control and aircraft dependence. Outdated FAA air-traffic-control technology and staffing shortages, slot limits at LaGuardia, JFK and Reagan National, and FAA-ordered flight reductions can cap capacity. Delta relies on a small number of aircraft and engine makers, so a fleet-type grounding or manufacturing problem could hit operations.
• Regulation, trade and environment. New tariffs on aircraft or parts could raise costs. Other regulatory and environmental exposures include:
  • PFAS cleanup liability under CERCLA;
  • CORSIA offsetting costs;
  • a possible 2026 extension of the EU Emissions Trading System to all departing flights;
  • EU and UK sustainable-aviation-fuel mandates, which have already raised SAF prices;
  • litigation over Dutch limits on Amsterdam Schiphol flights.

Delta's own emissions goals cannot be met with today's fleet and fuel supply, so missing them creates reputational risk.

• Macroeconomic and geopolitical conditions. Air travel is discretionary and cyclical. Conflicts force airspace avoidance, disease outbreaks can depress demand, and currency swings affect international results.
• Key personnel. Delta relies on its senior leadership and on preserving its company culture.

Legal proceedings. The principal disclosed matter is the 2015 consolidated class action alleging that Delta, American, United and Southwest conspired to restrain capacity. The court denied summary judgment in August 2023 and denied Delta's motion for interlocutory appeal or reconsideration in September 2025, so the case proceeds to class discovery. Delta says the claims are without merit.

Management's discussion, fiscal 2025

Source: 2025 Form 10-K, Item 7, accession 0000027904-26-000013.

In 2025 operating profit was roughly flat despite revenue growth. Operating revenue rose $1.7 billion (3%) to $63.4 billion on 3% more capacity, but operating expense rose $1.9 billion (3%) to $57.5 billion. Operating income was therefore $5.8 billion, $173 million below 2024. Net income still rose to $5.0 billion ($7.66 per diluted share) from $3.5 billion ($5.33), because $1.2 billion of mark-to-market gains on equity investments turned non-operating results to $363 million of income, from $1.3 billion of expense in 2024. The effective tax rate also fell to 19% from 26%.

Revenue mix shifted toward premium. Premium ticket revenue grew 7% to $22.1 billion while main-cabin revenue fell 5% to $23.4 billion. Management attributed the main-cabin decline to industry-wide supply exceeding demand in an uncertain economy. Loyalty travel awards grew 10%, and MRO revenue grew to $822 million from $658 million. Domestic passenger revenue rose 1% on 3% more capacity, so domestic unit revenue (PRASM) fell 2% on main-cabin weakness. Pacific revenue rose 10% on strong demand to Japan and South Korea, and Atlantic revenue rose 2%. Total unit revenue (TRASM) slipped 1% to 21.26 cents.

Costs. Fuel expense fell $747 million because the market price of jet fuel dropped 9%, which offset 4% higher consumption. Salaries rose $1.4 billion (8%) on pay raises of 5% in June 2024, 4% in June 2025 and 4% for pilots in January 2025. Landing fees rose 13% after airport redevelopments. Total unit cost (CASM) was flat at 19.31 cents. Non-fuel unit cost (CASM-Ex) rose 2.4% to 13.86 cents, consistent with the company's long-term target of low-single-digit growth.

Refinery. Segment revenue fell 10% to $7.0 billion on lower refined-product prices, but operating income rose to $157 million from $38 million on higher industry refining margins. Exchange agreements wound down (exchanged products fell to $580 million from $1.47 billion), which shifted more output into third-party sales.

Cash flow and balance sheet. Operating cash flow was $8.3 billion and free cash flow $4.6 billion, after $4.5 billion of capital expenditures. Delta repaid $4.8 billion of debt and finance leases, $2.9 billion of it early. In June 2025 it issued $2.0 billion of unsecured notes ($1.0 billion of 4.95% notes due 2028 and $1.0 billion of 5.25% notes due 2030), partly to retire a Payroll Support Program loan. In September 2025 it repriced and extended the SkyMiles term loan. Debt and finance lease principal stood at $14.1 billion at year-end, and liquidity, including $3.1 billion of undrawn revolvers, was $7.4 billion. Aircraft purchase commitments totalled $15.4 billion before Delta added widebody orders with Boeing and Airbus in January 2026.

Current quarter, September 2026 quarter

Sources: September 2026 Form 10-Q, accession 0000027904-26-000038; September quarter 2026 earnings release, Form 8-K Exhibit 99.1, accession 0000027904-26-000035; June and March quarter 2026 earnings releases, Form 8-K Exhibit 99.1, accessions 0000027904-26-000029 and 0000027904-26-000020.

The dominant story of 2026 is record revenue running into a jet fuel price shock. According to the 10-Q, Delta's average jet fuel purchase price rose 52% over the first nine months, "mainly due to increases beginning in March 2026," and 63% in the September quarter. Management expects elevated fuel costs to persist "until market disruptions and geopolitical events are resolved." Demand stayed strong enough for Delta to raise fares and record its highest-ever September-quarter revenue. Fuel nevertheless pulled GAAP profit well below 2025 levels, and the company cut its full-year outlook in October.

September quarter results. Operating revenue rose 21% to $20.2 billion. Operating expense rose 25% to $18.7 billion, so operating income fell $230 million to $1.5 billion and the operating margin fell to 7.2% from 10.1%. Mark-to-market losses on equity investments of $218 million, against $311 million of gains a year earlier, turned non-operating results to a $380 million expense. Pre-tax income fell to $1.1 billion from $1.8 billion, and net income fell 47% to $756 million. Excluding investment mark-to-market results and $208 million of Monroe hedge losses (the earnings release's non-GAAP adjustment for mark-to-market adjustments and settlements on hedges), adjusted pre-tax income was $1.5 billion, level with a year earlier.

Revenue drivers. Passenger revenue rose 15% to $15.5 billion on flat capacity (available seat miles up 0.3%), so the gain came almost entirely from price:

• passenger mile yield rose 14% to 22.80 cents, and passenger unit revenue (PRASM) rose 15%;
• premium ticket revenue rose 18% to $6.8 billion, and main-cabin revenue rose 12% to $6.8 billion;
• loyalty travel awards rose 18%.

Domestic revenue grew 16% on flat capacity. Atlantic grew 11%, mainly on premium demand. Latin America grew 14% despite 6% less capacity; Mexican leisure flying was cut because of civil unrest at several destinations in the first half of 2026. Pacific grew 13% on new Asian routes.

Other revenue rose 48% to $4.4 billion:

• third-party refinery sales rose $1.1 billion to $2.6 billion on higher product prices and the end of exchange agreements;
• loyalty and related revenue rose 19% to $1.3 billion, helped by a refreshed American Express card portfolio launched in the June quarter;
• MRO revenue rose 28% to $296 million, on a mix shift toward legacy engines.

Cargo revenue rose 29%. Excluding refinery sales, total revenue was $17.6 billion, up 16%, with adjusted unit revenue (TRASM) up 15%. American Express remuneration was $2.3 billion in the quarter, up 15%, and $6.9 billion year to date, up 14%. The earnings release says the full year is positioned to exceed $9 billion. The release also describes 61% of adjusted revenue as coming from premium products and diversified streams, and corporate sales as growing double digits in every sector.

Costs. Fuel expense rose $1.8 billion (69%) to $4.4 billion. The average price was $3.80 a gallon, or $3.61 adjusted, against $2.26 a year earlier. According to the 10-Q's fuel hedge note, fuel expense included $416 million of total losses on Monroe's fuel hedge contracts recognized in aircraft fuel and related taxes in the quarter; this is a different measure from the $208 million hedge adjustment in the earnings release. Salaries rose 9% on 4% raises for pilots (January 1, 2026) and other eligible employees (June 1, 2026), annual step increases and premium pay during operational disruptions. Other cost increases came from:

• in-flight Wi-Fi and entertainment;
• Sky Club and Delta One lounge expansion;
• higher airport rates after redevelopment projects;
• depreciation on new aircraft;
• additional engine leases.

Non-fuel unit cost (CASM-Ex) rose 7.3% to 14.03 cents. In the earnings release the CFO attributed this to higher crew and revenue-related costs on capacity growth that came in several points below plan, including nearly a point lost to summer storms.

Refinery. The refinery lost $33 million in the quarter, against $53 million of operating income a year earlier. Two factors drove the loss: volatile crude prices, and a temporary outage that halted production from mid-June 2026 and kept capacity reduced into the September quarter. By quarter-end the refinery was back at normal production, and management expects it to return to profitability in the December quarter. Year to date, the refinery earned $278 million, against $42 million in the same period of 2025.

Year to date. Over nine months, revenue rose 18% to $55.8 billion on 1% more capacity. Operating income fell to $3.8 billion from $4.4 billion, and net income fell to $2.1 billion ($3.15 per diluted share) from $3.8 billion ($5.80). The nine months include a March-quarter net loss of $289 million, driven by $550 million of mark-to-market losses on equity investments and $151 million of hedge losses. Profit-sharing accruals were $882 million, $104 million below the prior-year period. Operating cash flow was $5.7 billion, against $6.1 billion a year earlier. Capital expenditures rose to $4.1 billion from $3.6 billion.

Balance sheet and financing. Delta repaid $3.3 billion of debt and finance leases in the nine months, $2.3 billion of it early, for a net reduction of $1.3 billion. Total debt was $12.1 billion at September 30, 2026, against $13.3 billion at year-end 2025, and adjusted net debt was $13.35 billion. Liquidity was $6.9 billion, including $3.1 billion of undrawn revolvers. Current maturities of debt and finance leases rose to $3.3 billion from $1.6 billion. 2026 financing activity:

• January: a $1.25 billion term loan, used partly to repay $957 million of Payroll Support Program loans due 2031. In September Delta refinanced it with a new $1.25 billion term loan maturing in September 2027.
• April: a repricing of the SkyMiles term loan to SOFR plus 1.25%.
• June: a new corporate revolving credit facility that replaced the existing one and extended its maturities to 2029 and 2031.

Delta remained in compliance with its debt covenants. In May 2026 it contributed $57 million to a new $100 million Wheels Up term loan maturing May 2029. It also extended transfer restrictions on its Wheels Up stake to May 2027; the stake's fair value fell to $42 million from $173 million at year-end.

Fleet and commitments. At September 30, 2026 Delta operated 1,005 mainline aircraft (average age 14.9 years) and 325 regional aircraft. It took delivery of 13 aircraft in the quarter, including A350-900, A321neo and A220-300 aircraft. Aircraft purchase commitments rose to $26.7 billion covering 319 aircraft, after the March-quarter Boeing 787-10 and Airbus widebody orders and the exercise of options on 34 A321neos. The firm commitments by type are:

• 100 Boeing 737-10s;
• 83 A321neos;
• 53 A220-300s;
• 30 Boeing 787-10s;
• 20 A350-1000s;
• 17 A350-900s;
• 16 A330-900neos.

Delta signed a further supplemental agreement on its Boeing 737-10 purchase agreement on September 29, 2026; it is filed as an exhibit to the 10-Q with confidential portions omitted. Management now expects 2026 capital spending of "over $5 billion," against approximately $5.5 billion expected in the 10-K.

Capital returns and taxes. Cash dividends totalled $393 million over the nine months. Excluding mark-to-market effects, Delta projects a 2026 effective tax rate of 23% to 25%.

Outlook (October 9, 2026 release). Fuel moved faster than Delta's July planning assumed. The September-quarter guidance issued in July assumed fuel at about $3.15 a gallon, but the adjusted price came in at $3.61, and the company lowered its full-year 2026 earnings and free-cash-flow guidance in October. The December-quarter outlook assumes an all-in fuel price of about $4.25 a gallon, including a refinery benefit of about $0.40 a gallon, and non-fuel unit cost growth improving by 1 to 2 points from the September quarter. Looking to 2027, management expects low-single-digit non-fuel unit cost growth as capacity normalizes. It reiterated its long-term framework of mid-teens margins and returns, durable free cash flow and gross leverage of about one times.

Subsequent events

Sources: September 2026 Form 10-Q, accession 0000027904-26-000038; Form 8-K and Exhibit 99.1 dated October 9, 2026, accession 0000027904-26-000035.

The September 2026 Form 10-Q contains no subsequent-events note. Neither the 10-Q nor the October 9, 2026 earnings release reports any acquisition, divestiture, new financing or litigation outcome after September 30, 2026. The disclosed post-quarter items are:

• Dividend. The Board approved a quarterly dividend of $0.2150 per share on September 24, 2026, payable on November 5, 2026 to shareholders of record on October 15, 2026.
• Outlook. On October 9, 2026 Delta issued its December-quarter and revised full-year 2026 guidance, described above.