U.S. airline stocks experienced a significant rally on Thursday, fueled by strong quarterly results from Delta Air Lines (DAL). Delta's earnings exceeded analysts' expectations, and its decision to reinstate its financial forecast for the year has regained investor optimism for the airline sector, which had recently been dampened by uncertainty surrounding President Trump's tariff policies and a decline in consumer sentiment.
Shares of major carriers such as American Airlines (AAL), United Airlines (UAL), and Southwest Airlines (LUV) surged also surged, with American and United both seeing increases of over 11%. Southwest’s stock rose 5%, and Alaska Air (ALK) gained more than 8%. The news from Delta provided a much-needed boost to the sector, which had previously seen downward revisions to its financial forecasts for 2025.
Delta’s Earnings
Delta’s earnings report showed resilience in the airline industry amidst broader economic concerns. The airline reported adjusted revenue of $15.5 billion, slightly above analysts’ expectations of $15.54 billion. Adjusted earnings per share (EPS) came in at $2.10, exceeding the forecast of $2.07. Although Delta’s operating margin decreased to 13.2% from 14.7% last year, the airline reported key positive metrics, including a 5% increase in premium ticket revenue year-over-year and an 8% rise in loyalty program revenue.
Delta’s success in restoring its bookings, a crucial metric for the airline sector, was a critical highlight. The company also noted a decline in fuel costs, with a reported 11% reduction in fuel expenses year-over-year. This lower fuel price helped mitigate some of the pressures the airline had faced, further boosting its earnings performance.
Investor Focus on Other Airlines and Economic Headwinds
As Delta's positive report lifted sentiment, investors are now turning their attention to the other major U.S. airlines, which are due to report their earnings in the coming weeks. United, American, Southwest, and Alaska will likely be closely watched to see if they can meet Delta’s strong performance. Investors will be particularly interested in whether these carriers can restore their full-year forecasts, which had been pulled amid rising uncertainty regarding trade tensions and consumer spending patterns.
Airlines are also benefiting from falling oil prices, which have helped reduce one of their largest operating expenses: fuel. Delta's report highlighted a notable 14% decrease in its per-gallon fuel price. This trend is likely to continue providing relief to the sector, with analysts from Deutsche Bank predicting that United, American, and other carriers such as Sun Country Airlines (SNCY) and SkyWest (SKYW) will deliver earnings above current Street forecasts.
Looking Ahead
As U.S. airlines prepare to report their second-quarter earnings, the question remains whether the sector can maintain the momentum seen following Delta’s positive results. The airline industry faces many challenges, including trade uncertainty and fluctuating fuel prices. Still, the current boost in consumer confidence, aided by Delta’s performance, has the potential to sustain this rally.
All eyes will be on the next earnings reports from the major airlines, and whether they can match or exceed Delta's performance. If they do, there is a strong possibility that the broader sector could continue its recovery. Additionally, analysts will continue to monitor fuel prices and any new developments in trade policy that could impact airline profitability.
