Delta Air Lines (NYSE:DAL) reported March quarter 2026 results that executives said demonstrated strong demand and the benefits of a more diversified revenue base, even as jet fuel costs surged late in the quarter amid geopolitical tensions in the Middle East.
Chief Executive Officer Ed Bastian said Delta delivered earnings “40% higher than last year and consistent with our January guidance,” despite what he described as “a significant step-up in fuel and several external headwinds.” The company posted a pre-tax profit of $530 million, earnings of $0.64 per share, and $1.2 billion of free cash flow, alongside a 12% return on invested capital.
Record first-quarter revenue and broad-based demand
Esposito said both domestic and international unit revenue rose at mid-single-digit rates, supported by strength in premium and main cabin. He also highlighted an “inflection in main cabin with the first full quarter of positive unit revenue growth since the end of 2024.”
Diverse revenue streams continued to play a large role, Esposito said, representing 62% of total revenue. Premium and loyalty revenue both grew in the mid-teens. Remuneration from American Express increased 10% to “over $2 billion,” driven by 12% spend growth and strong acquisitions, while corporate sales grew at a double-digit rate and set a quarterly record.
Fuel surge drives capacity discipline and pricing actions
Management repeatedly pointed to a sharp move higher in fuel prices tied to the Middle East conflict. Bastian said the war “has driven an unprecedented spike in jet fuel,” describing prices as “roughly double what they were earlier in the year.” CFO and newly named Chief Operating Officer Dan Jencki said first-quarter fuel averaged $2.62 per gallon, including a $0.06 refinery benefit, which was “nearly 40 cents higher than we expected at the start of the quarter, driven by the sharp run-up in March.”
For the June quarter, Jencki said Delta’s outlook assumes approximately $4.30 per gallon based on the forward curve as of April 2, about double last year’s level. That assumption includes an estimated $300 million benefit from Delta’s refinery and implies “more than $2 billion of additional fuel expense in the quarter” versus the start-of-year outlook.
Bastian said Delta is “meaningfully reducing capacity in the current quarter with a downward bias until we see the fuel situation improve,” while moving “quickly to recapture higher fuel prices.” On the analyst call, executives said the company is targeting capacity reductions in “off-peak times,” including “edge of day” and red-eye flying, which Esposito noted can be easier to adjust in response to fuel costs.
When asked about fare and fee actions, management indicated the June quarter outlook assumes higher fuel persists through the quarter and anticipates improved revenue per available seat mile as pricing actions take effect. Esposito added that while fuel recapture has historically lagged 60 to 90 days, the industry response appears faster this time due to the size and pace of the fuel move.
June quarter outlook: low-teens revenue growth, margin expansion expected
Based on current booking trends, Bastian said Delta expects “low teens revenue growth in the June quarter,” while recapturing 40% to 50% of the quarter’s fuel headwind. The company expects a 6% to 8% operating margin and pre-tax profit of $1 billion. Jencki guided to earnings per share of $1 to $1.50 for the second quarter.
Esposito said Delta expects second-quarter total revenue growth in the low teens on flat capacity year over year, driven by double-digit passenger unit revenue growth—an acceleration from mid-single-digit passenger unit revenue growth in the March quarter.
Management said demand indicators remain strong. Bastian cited “double digits” growth in cash sales over the last month and continued double-digit spend growth on the Delta American Express card portfolio. Esposito said cash sales grew in the mid-teens in March, with momentum extending into April “across the booking curve and in both premium and main cabin.”
At the same time, executives noted pockets of weakness. Esposito said point-of-sale Europe has been “a little bit weaker,” and Delta has seen “a little bit weakness in Mexico leisure” following incidents in Punta Vara, prompting capacity actions in that market.
Costs, balance sheet progress, and MRO growth
Jencki said first-quarter operating margin was 4.6%. Non-fuel unit costs increased 6% year over year, reflecting lower capacity growth than planned and higher recovery costs. He said Delta generated $2.4 billion of operating cash flow after a $1.3 billion profit-sharing payment and, after $1.2 billion of reinvestment, produced $1.2 billion of free cash flow.
Delta continued to reduce leverage, with adjusted net debt ending the quarter at $13.5 billion, down 20% from the prior year, and gross leverage of 2.4 times. Jencki said Delta is investment grade at all three credit rating agencies and has reduced adjusted net debt below 2019 levels.
Jencki also highlighted Delta’s third-party maintenance, repair, and overhaul business, noting first-quarter MRO revenue “more than doubled” year over year to $380 million. Delta expects a “more normalized rate” of growth over the remaining quarters but maintained a full-year MRO revenue outlook of $1.2 billion, which Jencki said would represent nearly 50% improvement versus last year with expanding margins.
Operational reliability, fleet renewal, and digital initiatives
Operationally, Bastian said Cirium named Delta the most on-time airline in North America for the fifth consecutive year, but he acknowledged that “over the past several months, particularly following severe weather, our reliability and recovery haven’t met consistently enough our high standards.” He said Delta is taking targeted actions to improve resilience and recovery and to address challenges related to contractual changes to its pilot working agreement, adding that the airline is partnering with pilots and union leadership to restore performance.
Delta also described continued investment in customer experience and its network. Bastian said the company placed firm orders for 95 additional aircraft to accelerate fleet renewal and support international growth. He also cited lounge expansion, including a new Sky Club in Denver and renovations in Atlanta, and pointed to the rollout of fast, free Wi-Fi across 1,200 aircraft.
On the digital side, Bastian highlighted a partnership with Project Kuiper to bring next-generation satellite connectivity and said Delta expects to exceed 110 million customer logins on Delta Sync this year, with partners including The New York Times, YouTube Premium, Paramount Plus, American Express, and T-Mobile.
In media Q&A, Bastian said Delta had not adjusted hiring plans due to the capacity changes, adding that frontline hiring for the summer season was “largely completed” already. He also reiterated Delta’s focus on maintaining its competitive advantage, particularly with premium customers and in coastal markets where he said Delta continues to take “an outsized share.”
About Delta Air Lines (NYSE:DAL)
Delta Air Lines is a major U.S.-based global airline that provides scheduled passenger and cargo air transportation, aircraft maintenance and repair services, and related travel products. Its operations include mainline domestic and international passenger services, a branded regional network operating under the Delta Connection name, dedicated air cargo carriage, and in-house maintenance, repair and overhaul through Delta TechOps. Delta offers a range of cabin products for different customer segments, including premium business-class service on long-haul routes and tiered economy offerings on domestic and international flights, and it markets customer loyalty benefits through the SkyMiles frequent-flyer program.
The carrier operates a mixed fleet of narrow- and wide-body aircraft from multiple U.S.
