Delta Air Lines Set to Kick Off Airline Earnings Season: All Eyes on Premium Travel, Tariffs, and the State of the Skies

Delta Air Lines will report second-quarter earnings Thursday morning, setting the tone for the U.S. airline industry during a period marked by economic crosswinds, pricing pressure, and structural shifts in travel demand. As the first major airline to report, Delta’s results will offer a vital read-through for full-service peers like United and American, as well as low-cost carriers facing mounting headwinds. For investors, management’s commentary on demand trends, pricing, and fuel costs could shape sentiment across the sector heading into the crucial back half of 2025.

WATCH: How China Took the Market—and How the U.S. Gave It Away

Delta is scheduled to report before the market opens on July 10. Analysts expect earnings per share (EPS) of $2.07, a 12.3% drop from the prior year, on revenue of $16.21 billion, up 5.3% year over year. Given the company’s historical earnings-day volatility—70% of the past five years' reports have seen a negative one-day reaction—investors are bracing for impact.

Key metrics to watch include Total Revenue per Available Seat Mile (TRASM), premium cabin revenue growth, international traffic performance, and free cash flow. With domestic leisure demand soft and price-sensitive travelers pulling back, Delta’s exposure to premium travel and international routes has become even more critical. Also of interest: whether management provides updated full-year guidance after withholding it last quarter due to tariff-related uncertainty.

Delta’s first-quarter results came in stronger than feared. EPS and revenue topped estimates thanks to resilient demand in premium cabins, robust loyalty revenue from its American Express partnership, and strength in international markets—especially the Pacific region, where revenue jumped 16%. While Main Cabin bookings fell, Delta leaned on its diversified revenue model to offset the weakness. Domestic TRASM fell 1% year over year, but premium revenue rose 7%, and total operating cash flow remained solid, helping reduce debt by $531 million.

Despite the challenging macro backdrop, Delta took several shareholder-friendly steps this quarter. The company raised its quarterly dividend by 25% to $0.1875 per share and announced a 4% wage hike for eligible employees—its fourth consecutive raise since 2022. These actions underscore confidence in its financial footing, even as near-term demand remains cloudy. CEO Ed Bastian emphasized the company’s ongoing strategy of protecting margins and managing capacity growth conservatively, keeping 2H25 levels flat to 2024.

Broadly, the airline sector is being pulled in multiple directions. Full-service carriers like Delta, United, and American are expected to remain profitable, but face diverging trends. International travel and premium seating continue to outperform, while Main Cabin bookings—especially among price-sensitive leisure customers—have faltered. UBS notes that app traffic for Delta and United was positive in April, a constructive sign, but acknowledged pricing remains under pressure, especially for domestic routes.

Low-cost carriers, meanwhile, are struggling. With overcapacity and fare wars compressing margins, several are expected to post losses in Q2. UBS forecasts full-year airline earnings will contract 20% to 25% industry-wide, reflecting an uneven recovery heavily skewed toward the Big Three carriers.

Adding complexity, new geopolitical and policy risks have emerged. President Trump’s newly imposed tariffs—including on Chinese-made aircraft components and metals—are set to affect airline cost structures and consumer spending alike. Delta was among the first to flag tariffs as a potential drag on FY25 guidance. Jet fuel prices are also creeping up after geopolitical tensions in the Middle East flared again in June, with the average barrel up 7.4% week-over-week mid-month, nearing $90.

Yet not all signals are bearish. The July 4 holiday week saw record TSA traveler screenings—18.5 million passengers—peaking at nearly 3 million on July 6. The surge offers hope that pent-up travel demand remains intact, even if ticket pricing remains depressed. Hopper data showed domestic round-trip fares averaged $265 for the holiday, down 3% from 2024 and the lowest in four years.

Looking ahead, analysts are cautiously optimistic. UBS recently upgraded Delta to Buy, citing improving international momentum, stabilizing macro conditions, and a more favorable TRASM setup in the second half of 2025. The firm raised its price target from $46 to $66. Meanwhile, Delta’s long-term positioning remains intact: its strategic focus on premium revenue, disciplined capital deployment, and loyalty economics could provide an edge in a sector marked by volatility.

Thursday’s results will offer a first look at how airlines are navigating this environment—and whether Delta can once again fly above the turbulence.