Delta Air Lines Stock

Good morning, everyone, and welcome to the Delta Air Lines June Quarter 2026 Financial Results Conference Call. My name is Matthew, and I will be your coordinator. [Operator Instructions] As a reminder, today's call is being recorded. [Operator Instructions]

I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations and Corporate Development. Please go ahead.

Thank you, Matthew. Good morning, everyone, and thanks for joining us for our June quarter 2026 earnings call. Joining us from Atlanta today are our CEO, Ed Bastian; our Chief Operating Officer, Dan Janki; our Chief Commercial Officer, Joe Esposito; and our Chief Financial Officer, Erik Snell. Ed will open the call with overview of Delta's performance strategy. Dan will cover the operation. Joe will provide an update on the revenue environment, and Erik will discuss costs in our balance sheet. [Operator Instructions].

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 actual results to materially differ from 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. You can find a reconciliation of our non-GAAP measures on the Investor Relations page at ir.delta.com.

And with that, I'll turn the call over to Ed.

Thank you, Julie. Good morning, everyone. We appreciate you joining us today. This morning, we reported our June quarter results, and it's clear that Delta's brand and industry position are stronger than ever. We generated record revenue, which grew 14%, increasing more than $2 billion over last year. This reflects sustained strength in demand and momentum across our diversified business. We delivered pretax profits of $1.4 billion, earnings of $1.56 per share and an operating margin of 9%, all better than the guidance that we provided at the start of the quarter. Return on invested capital was 11%, well above our cost of capital. So through the first half, we've generated $1.4 billion of free cash flow, fortified our investment-grade balance sheet and announced a 15% increase to the dividend.

And most importantly, we kept investing to make travel safer, easier and more enjoyable for our customers. Our people are what truly set Delta apart. Their efforts delivered industry-leading performance across key operational metrics and also earn Delta recognition from The Points Guy as the best U.S. airline for the eighth consecutive year. Our people are our #1 competitive advantage, and I want to thank the Delta team for their commitment to delivering for our customers every day, particularly during the busy summer travel season. In May, we announced a 4% pay increase and we've accrued nearly $500 million towards next year's profit sharing payout through the first half of the year. Both reflect our long-standing commitment to sharing success with the people who drive it.

Turning to the current environment. The U.S. economy remains resilient, supported by strong employment rising household incomes and strong significant wealth accumulation. Our customers are prioritizing experiences and investing in the moments and connections that matter most of them, driving sustained strength in demand for air travel. These trends align well with Delta's strategy, demonstrating the loyalty that we are seeing across customer segments and powering high-margin diverse revenue streams that enhance the resilience of our business. Our Delta American Express partnership is a clear example of the strength of our loyalty ecosystem. Card spend has grown double digits for the past 7 quarters with particular strength among our premium reserve cardholders. With continued momentum in both new card acquisitions and spend, we expect remuneration of $9 billion this year, up 10% over 2025.

As I stated in April, high fuel prices have proven to be the most powerful catalyst for change in our industry and this year, that has once again been the case. Coming into the recent fuel spike, most U.S. carriers were already struggling to earn their cost of capital against a backdrop where industry airfares have meaningfully trailed inflation. Costs have reset higher and consumer preferences have evolved. And as we predicted, structural change has accelerated, enabling the industry to recapture this year's fuel cost inflation at the fastest pace of any recent cycle. Even after recent fare increases, airfares remain 10 to 15 points below overall inflation since COVID. With continued fuel volatility and much of the industry is still earning returns below its cost of capital we believe current revenue momentum shall remain sustainable even if fuel prices moderate. That is an important step towards improving the industry's financial health and earnings sustainable returns over time.

For Delta, we are executing on our strategy from a position of strength and with continued revenue momentum, measured capacity and a more stable fuel environment, we expect to return to earnings growth on double-digit operating margins in the second half of this year. For the full year, we are affirming the guidance that we set at the start of the year, even with a multibillion dollar fuel headwind. Our outlook for earnings of $6.50 to $7.50 per share represents growth of 20% year-over-year and our free cash flow outlook of $3 billion to $4 billion brings our 3-year cumulative total to over $11 billion. Looking beyond 2026, we are confident in our long-term financial framework and path to mid-teens margins and return on invested capital.

The strength and consistency of our results give us the ability to keep investing and innovating to extend Delta's lead, elevating the experience in creating a more seamless and personalized travel journey. As we invest in the areas that customers value the most, loyalty to Delta continues to grow. Last month, we opened our second Delta One Lounge at LAX, bringing the Delta One Lounge network to 5 locations and expanding the industry's largest cloud and lounge footprint. Our Delta Amex co-brand card continues to lead the industry, and our recent portfolio enhancements are strengthening the value proposition for both existing and prospective cardholders. We are also making the journey more seamless through Delta Concierge, our AI-powered digital assistant, which is now available to more than half of Fly Delta app users with a full rollout later this month.

In the year, we continue to set the standard on connectivity. Fast free WiFi is already available to members across nearly our entire fleet with satellite upgrades coming online in the months ahead to deliver even faster speeds and broader global coverage. And starting in '28, Amazon Leo will unlock the next generation of onboard connectivity, reach and personalization. In closing, our performance and outlook reinforce the durability and the differentiation of the Delta business model and our investment thesis. Looking ahead, I am incredibly optimistic about Delta's future and our opportunities to deliver even better performance for our employees, our customers and our owners.

Now Dan will cover off on our operational results.

Thank you, Ed, and I want to begin by thanking the Delta team for the outstanding service they provide our customers every day. Operational excellence is core to the Delta brand and its experience our customers expect. Our culture of continuous improvement that spirit of keep climbing drives us to get better every day. This, combined with the continued investment in technology and data, better position our people to run a great operation, improving reliability and efficiency.

During the quarter, we extended our industry leadership in on-time arrival and departure performance while strengthening operational metrics across our system. Completion factor improved through the quarter. We expect continued progress into the second half as targeted actions we have taken to improve resilience gain further traction. We delivered record baggage performance, led by our largest hub in Atlanta, where performance has improved meaningfully from last year's strong baseline, supported by enhancements to our baggage handling system and processes and our patented baggage AI technology. Delta's continued to lead large U.S. carriers in domestic Net Promoter Scores, improving over last year. This was driven by outstanding service of the Delta team with people interaction scores reaching all-time records across this global system. This includes year-over-year improvement across airport customer service, reservations and care, flight attendant and our pilots. This performance reflects the focus of our people reinforces how we're making travel easier and more reliable to every customer.

We are continuing to invest in technology while empowering our people to deliver more proactive communication directly to customers. We're also enhancing digital tools with a simplified rebooking process, expanded self-service and continued rollout of Delta Concierge. Our customers are noticing. This has driven more than a 25-point improvement in NPS during periods of irregular operations. A more reliable customer experience starts with a more reliable fleet, and our Delta TechOps team is central to that. Key fleet reliability metrics, including aircraft out of service levels, maintenance-related delays and cancellations all improved versus prior year, benefiting from predictive maintenance capabilities and the investments we've made in fleet resilience over the last few years.

Beyond supporting our own operation, the tech ops represents an exciting operation to further diversify our revenue through growing our third-party MRO business. This year, we remain on track to generate approximately $1.2 billion of revenue, up nearly 50% from last year, with low double-digit margins. And over the next several years, our technical capabilities, coupled with our strong customer relationships and record backlog position us to more than double MRO revenue while expanding margins.

Now I'll turn it over to Joe to cover our commercial results and outlook.

Thank you, Dan. June quarter results reflect strong execution and our clear prioritization of managing for margin. Total revenue of $17.7 billion was at the high end of our expectations, up 14% over prior year on approximately 1% capacity growth, driving total unit revenue growth of 12.4%. We are focused on continuing this revenue momentum to fully recover this year's fuel cost pressure and improve margins as we move through the back half of the year. Domestic led unit revenue growth, up 12.4% and driven by higher yield with international growing 8% over prior year, led by Latin.

Importantly, main cabin trends improved through the quarter with main cabin unit revenue growing mid-teens in the month of June. Across corporate sales, all sectors posted double-digit growth. Performance was strong across core and coastal hubs where sales rose more than 20% versus prior year. Diverse revenue streams represented 61% of total revenue in the quarter, up 2 points over last year with premium and loyalty revenue both up nearly 20%. Cargo revenue grew 39%, primarily on volume and MRO delivered revenue growth of more than 30% year-over-year, driven by legacy engine platforms.

Now turning to outlook. Demand remains strong and broad-based. Cash sales improved through the quarter across the entire booking curve in both premium and main cabin products. These trends combined with our measured approach to capacity growth, support the sustainability of yield strength. We accept September quarter revenue to grow mid-teens versus last year. Total unit revenue growth is expected to improve sequentially, even against more challenging prior year comparisons. And while it remains early, December quarter bookings are coming in strong, giving us confidence that this revenue strength will extend through the fourth quarter.

Capacity for the third quarter is up 1%, while fourth quarter planned 2% to 3%, led by international. Our integrated commercial strategy is how we will continue to deliver our revenue and margin premium to the industry. We are expanding our global network through new routes and JV partnerships while continuing to renew our fleet, enabling us to grow the network more profitably. We are also improving the product and giving customers more choice. The rollout of basic, classic and extra offerings in Delta Comfort is now complete, and will be expanded across all premium cabins this quarter. These offerings increased flexibility for customers while driving improved revenue performance.

Loyalty remains one of Delta's most valuable assets SkyMiles membership growth is outpacing capacity led by double-digit gains among Gen Z members. That engagement is translating into durable revenue, best illustrated by our industry-leading co-brand performance. In closing, these investments reinforce our competitive advantage and give us more ways to grow revenue, deepen loyalty and expand margins over time.

I'll now hand it to Erik to discuss our financial performance.

Thank you, Joe. I want to start by recognizing the Delta team for delivering strong 2Q results. We generated $1.4 billion of pretax profit with an 8.8% operating margin, despite the highest fuel costs in our history, reflecting the structural advantages we've built in the business.

Total fuel expense was $4.4 billion, up nearly $2 billion versus last year. Fuel price per gallon averaged $3.93, including an $0.11 refinery benefit net of a $0.05 impact from a temporary outage. Fuel price came in better than guidance as lower crack spreads more than offset the reduced refinery benefit. The refinery is a strategic advantage for Delta, providing a meaningful offset in a high crack environment. And we expect 2026 to be one of its most profitable years. Nonfuel unit costs increased 6.8% over prior year in the June quarter, reflecting higher crew and revenue-related costs on capacity growth several points below our initial plan.

Through the first half, we generated $4 billion of operating cash flow and $1.4 billion of free cash flow after $2.6 billion of reinvestment. Investments we are making are further compounding our advantages. The durability of our performance allows us to invest year after year in our employees and in elevating the customer experience, all while continuing to pay down debt. Our balance sheet is the best in Delta's history with investment-grade ratings from all 3 major credit agencies and a substantial and growing base of unencumbered assets and secured borrowing capacity. We ended the quarter with adjusted net debt of $13.6 billion, down from year-end, while much of the industry raised additional capital.

Debt reduction remains a top priority, and we expect gross leverage to reach 2x by year-end. As we move toward our long-term target of 1x, we remain committed to increasing shareholder returns.

Turning to our outlook. We expect September quarter nonfuel unit cost performance to improve modestly with further progress in the December quarter as operational investments continue to gain traction and capacity growth begins to normalize. This puts us back on a path toward our long-term framework of low single-digit unit cost growth. Our outlook assumes an all-in fuel price of approximately $3.15 per gallon including a $0.05 refinery benefit. Total fuel expense is expected to be about 40% higher than last year. Combined with our mid-teens revenue growth outlook, we expect a 3Q operating margin of 11% to 13% and earnings per share of $2 to $2.50, up meaningfully from $1.70 last year.

In closing, the affirmation of our full year outlook from the start of the year and ability to grow earnings despite a nearly $4 billion increase in fuel cost, reinforces that Delta's durability continues to improve relative to prior cycles and to the industry. Delta's differentiated strategy and consistent execution across dynamic environments give us confidence in delivering our long-term financial framework and creating sustained value for our owners.

We will now move to Q&A. Julie, please open the line for analyst questions.

Matthew, can you please remind the analysts how to enter the call, please.

[Operator Instructions] Your first question is coming from Conor Cunningham from Melius Research.

Joe, I was hoping to start with you. Can we just talk a little bit about the progression in unit revenue throughout the second quarter. I'm just trying to get a sense from the difference between the revenue production that you saw in April versus June just given the mix dynamic as you were more exposed to the higher fares. Again, not asking for monthly, just trying to understand the spread a little bit as we get a little bit more comfortable with the second half outlook on revenue.

It's one of the things that gives us confidence as we go into the back half and especially the third quarter. Our exit rate on TRASM was significantly higher than our entry rate. And that goes to how the -- our fuel recapture strategy moved through the quarter. I forget we started it in March. And in April, we were already 70% booked. And so each month, you get more and more of new revenue, new priced revenue that comes through the system.

So again, it was significantly higher as the exit rate for both premium and main cabin. And that's what gives us towards our guide for third quarter and our confidence in the back half of the year.

Okay. And then maybe bigger picture, a lot of comments around if we boil it down, it seems like you guys view the industry being a little bit different on how they price going forward just given the changes that out there. So I mean you didn't explicitly guide to fourth quarter, but rough math suggests that you expect pricing to remain firm from here. So just I'm just trying to understand what gives you confidence in that? I know you've talked a little bit about it, but I'm just hoping to broaden out the conversation a little bit more.

Yes. I think it's -- gives us a lot of confidence in the fact that we're going to hold on to the pricing environment and the revenue momentum. The industry has no other choice. I mean we -- the inflation that's going through both on fuel and nonfuel is significant. And fuel prices are still elevated. So that's why we have confidence in holding on to the revenue under a modest capacity increase as well. So that would imply good confidence in the back half.

Our forward cash sales, when you look at both cash and bookings, are higher than our close end. And that's what we want to see and when we think about confidence for the back half for the greater than 90%, greater than 120 days. And then as you get into fall for Delta's network, we're much more of a business-oriented network. Post-summer environment, not only for domestic, but for international. So that's where we -- that's where our confidence comes from in the back half.

Your next question is coming from Mike Linenberg from Deutsche Bank.

Ed, this one is for you. I think by all measures of market share, it does look like the low-cost, low-fare carrier group, I guess, what I would call it is in a bit of a secular decline Look, you've been around for some time. Sort of about that. And the reason I'm also bringing it up is that -- as we think about the industry's ability to hold on to fare increases, I think one of the concerns among investors is that it's going to be carriers from that group that come in and undermine the structure as maybe as energy prices come off. Just your thoughts around that?

Sure, Mike. Thanks for that. The -- what we've seen, and it's not just this quarter, it's been building for the last several years is that we've seen some fairly significant structural changes to the overall industry landscape. Probably the last time that we saw the element of fuel moving around with a lot of volatility was maybe 9, 10 years ago. And back then, the low-cost carriers with the darling of the industry. They had the highest margins. They had the highest growth rates. They look to fuel as a competitive advantage because they had lower cost in other areas.

Some of them such as Southwest had fuel hedges in place, which they used to try to take market share None of that exists any longer. All of that world has changed completely entirely. No one has fuel hedges of any note. The cost of production, not just for fuel is up, but the cost for labor is up, the cost for airports are up, cost for technology is up, planes you can't get. And if you can get them, their costs are higher. And so what that tells you is that you need to figure out a change to the business model that will enable you to build resilience in your pricing durability. And that's what we've done over time. And that includes not just getting higher airfares that includes the diversification of the revenue stream. That's why our American Express relationship is so important to us.

So IR corporate, the leader for the last 15 years in business travel across the United States is important to us. That's why our international growth has been important to us. That's why the MRO and cargo are employed , all of which are growing double digits. So we've been building this. And you wrap that around an experience that is substantially better in terms of the premium experience that we offer today versus 10 years ago. And the opportunities now that we have with technology to become true world-class merchandisers and retailers. 10 years ago, we were a blunt instrument. We had a couple handful of price categories on the shelf. Today, we're continuing to add to that.

So what we're seeing here is no surprise to Delta. The fact that you've got others in the industry following our lead is no surprise as well. But I mentioned a point on the call this morning. that even with the improvements we've seen in pricing for the industry, the low end of the market still has to increase fares by another 5% by our estimate, just to get to breakeven at a fuel environment. and there's nothing to be gained by trying to grow in that environment. What the opportunity has to be in finding ways to secure higher revenues, not higher market share.

Just a quick one on to Dan. Dan, you've talked about rate actions that you were taking to improve the option and you talked about how the numbers had improved for the quarter. I know I saw that there were some talk about maybe on the staffing side. Anything there or on the fleet side, any particular fleet giving you problems this quarter?

I would say the Mike, thanks for that. I would say on the fleet elements, you just have to be systematic across the board about continuing to invest and put resiliency in it. And our teams have gotten continue to get better. We have opportunity to get better on that front. A lot of that is just capturing your data, more predictive maintenance staying out in front of it and continuing to work it. And we've seen that, and I talked a little bit about those stats that we're seeing improvements in, but we want to continue to make progress there.

And then the other one that we've talked about is the actions that we're taking around the resiliency and capability around our crew resourcing and continue to put more people process technology around that and get better utilization out of those resources, and we continue to make progress on that front.

Your next question is coming from David Vernon from Bernstein.

So I guess the one question I had for you with regards to the Canada outlook. Obviously, you made some comments in the prepared statements around cost moderating as you get more normalized growth. Can you just talk about what that means kind of for 4Q, maybe beginning of next year ASM growth, where in the network you're looking to maybe add capacity? And maybe just stepping back to Matt, where do you see in the marketplace, an opportunity to put capacity into work that is compensatory just given the state of affairs and where oil is?

Yes, David, it's premature to be out giving guideposts for '27 and I know that's not what you're asking. But we've come through a period here over the last -- this quarter, certainly the third quarter looking forward with muted capacity. It was an obvious response to the fairly dramatic fuel spike that we saw fuel continues to stay elevated. Fuel today is 50% higher than where we started the year at. I think you're going to find the crack spreads are going to continue to be sticky. I think they will come down, but I think it's going to be sticky coming down, given the questions that are out there in the Middle East and other parts of the world about what kind of damage was done through the refineries and the value -- the amount of production capability that you can find.

So I would anticipate that in the fourth quarter for Delta, you'll see us kind of return to a little bit more of a normalized capacity run rate that 2% to 3% that we've historically looked at kind of keeps us around in par with where economic growth is. And then as we go forward to '27, it's probably the mindset that we've had. You guys follow us well, and you've seen how this team thinks about this stuff. We try to stay in our lane in terms of our strategy. We're not out there trying to compete on someone else's strategy. We're a focus on Delta strategy. The growth that we're seeing here for the back end of the year going into the next couple of years will largely be in 2 areas. They'll first of all, obviously be focused on profitable growth, but it'll be upgauging.

We've taken a holiday over the last couple of years from upgauging as we've had some fleet resets here. We'll get back in the next year or 2 as we take delivery of the MAX 10 and some additional narrow-body opportunities to get an upgauge going, and it's a very efficient way to grow. And secondly, international. And the international areas we are growing are in line with our strategies going into some new markets in the Middle East such as Riyadh, bringing Tel Aviv back as well as expanding in Asia. But that's kind of the outlook for growth as I see it for the next year or so.

All right. That's helpful. And then maybe just a quick follow-up. You mentioned the MAX 10 being out there in MAX 7, it sounds like we're getting a little bit closer to the end of the tunnel. Do you think that the delivery of some of those aircraft that have been constrained can offset kind of what is a better structural environment? Or does that factor into the -- to your consideration?

It absolutely does add to the structural changes. The -- one of the fuel that power the low-cost evolution was being able to grow faster than your cost work, we with all the aircraft availability from both Airbus and Boeing on the narrow-body side. that has dramatically changed. And by the way, it's not the question whether Boeing and Airbus can even produce the aircraft as much as the engine producers and the lack of durability that we've seen in the quality of the new engine technologies isn't anywhere close to the pre-existing technologies that we had previously.

So I think availability of aircraft is a fairly significant constraint as well. And for us, we're looking forward to get into MAX 10, we expect to see that in Delta colors next year, which will be great to have, but it's also going to enable us to release some older narrowbodies and whether it's 717s and 757s that it will be a replacement.

Your next question is coming from Andrew Didora from Bank of America.

Joe, just a question on international. Just curious if we were sitting here in March, how much of your 2Q international was on the books versus 3Q? Because I just ask because me international, and particularly Atlantic, maybe a little bit below what we had thought, but I feel like it could be something with the booking curve. So should we be expecting a better sequential improvement internationally because of that dynamic? And any thoughts you can provide on the international geographies would be helpful.

Yes, that's exactly right. Typically, your long-haul international has about 15 points of bookings more than domestic does. So when you were in March, April was very much booked and customers booked their travel, especially transatlantic for the summer. They actually start in January and February with that booking curve where domestic is closer in. So yes, you will see sequential improvements as we go through the next quarter and into the fall in terms of that. So that's a good thing.

And then also business improved significantly in the transatlantic as you get into September and October in the off-season. So around the world, trends Atlantic for us will still have a very solid summer. Demand has been very strong as we've been talked about for the past -- in the past, our foreign point of sale has been a little bit softer, but we've transitioned to more of a U.S. point of sale, where we're over 80% now for U.S. point of sale in the transatlantic. And that falls back to our strengths. The fares are higher and the strength of our brand in the U.S. is much higher. So the Transatlantic will have a great summer. The good thing about the transatlantic is it's smoothing out. The seasonality has been flattening, which is good for us, and people are moving their trips more into the shoulders in the traditional off-season.

Pacific has kept up with capacity. We're actually growing the Pacific. So unit revenues were up about 8% on similar capacity. And you've seen us with 2 new markets this year, Hong Kong and we're annualizing Melbourne and Los Angeles, Shanghai and Salt Lake City Inchon, Asia and the Middle East will be the focus for the next couple of years. Latin is a little bit of 2 different stories. South America has been very strong this year and for the past really 18 months and the forward look really good based on our partnership with LATAM, aligning ourselves with their connecting bank structures in South America. Mexico has been a little bit weaker as the incidents, the violence this earlier this year. So Mexico had been a little bit softer as well as short haul, but we'll expect to see improvement in that as we get into the fourth quarter of this year.

And our capacity also reflects that. We were down 7% in Latin America, with most of that is in the short-haul category. And we'll bring that capacity back based on demand. And it's not a sure that comes back. It's slowly coming back. But we'll see -- we should see a strong winter for leisure travel. And again, South America has really been the bright spot. Just getting back to domestic, again, that had been the lead in the lead in unit revenue performance and really strong performance as you exited the quarter on unit revenue versus when you enter and it's good for the participation of all the carriers that have come in on fuel recovery, the fastest in the domestic system and the fastest we've ever seen historically.

So domestic is on a really good trajectory, especially with corporate sales traveling in the U.S. and a couple of bright spots that while we said 20% for corporate, big cities like Los Angeles and Boston were actually closer to 30%. So really good progression in the domestic system.

That's great, very helpful. And then as a follow-up, actually, I just wanted to ask about the cabin segmentation you announced earlier this week. I know you've teased it about wanting to give your customers a little further choice. But I'm just curious on like how far you think this can go. So are there further opportunities to continue to maybe expand this a la carte option. And any comments on how you view those options over the next 3 to 5 years could be helpful.

Yes. Thanks. I mean we're really still in the early stages of segmentation, and we've gone through Main Cabin several years ago. We just recently expanded into Comfort+. And right now, we're launching into our premium products. And I think there's a lot -- it's a great benefit for the consumer. It's a great benefit for revenue upgrades, gives the choice to the customer.

And I think what you can see, and I think you're in the early stages because I think what you can see for the future is how do we retail all of our products in those categories and actually reward our best customers we put better and better products into those categories for the future. Today, it looks very much like a typical revenue management type merchandising. But I think with all the great brands that we're associated with, you can see a world where you're merging the retailing with it.

Your next question is coming from Tom Fitzgerald from TD Cowen.

Just curious on cargo. I was wondering if you could unpack some of the strength in 2Q, I don't know if that was just obviously, spot prices have surged and there's fuel charges, but with some of your fleet investments, there's a car going over that as well. And I don't know if we should expect that cargo number to decelerate in the back half or kind of continue to show some pretty good strength.

Yes. Thanks, Tom. Most of what we saw for cargo revenue is a great quarter. We're really proud of the team, was on volume. And you've had some rerouting of cargo that typically goes through the Middle East and other areas that we've been able to recapture. But it's also the structural improvements we've made internally, which depending on where we're expanding, Asia is one of the largest cargo markets from the U.S., and we've been expanding in the Asian market.

We've been getting greater capability of our airplanes that we've been investing in. And we've done a lot of internal restructuring and how we approach cargoes and much more of a priority. So we'll see strength throughout the year in cargo, probably not the 39%, but we're going to have a really strong back half in our cargo sector. And that will play a bigger role as we continue to invest in international cargo is a big part of international and goes towards the profitability of our international entities.

Okay. That's really helpful to hear really encouraging. And then I guess just maybe on the MRO side, would you mind just providing us your latest thinking on the kind of margin trajectory of that business in the back half and the next couple of years? I know you're longer term, I've been talking about mid-teens, but seeing some nice growth year-over-year in the first [indiscernible].

Sure, Tom. What we've talked about is that mid-teens is the target. We expect to expand a couple of hundred basis points a year. The first half of this year was better than that. We got a lot of volume leverage, given the revenue growth that we expected. But I would -- as you think about this business going from 10% to 12% to the mid-teens with the double-digit revenue growth, that would be the progression that I look at. And so we've been out there. We believe and the team believes that they got the backlog. They think a technical capability to market position, not only grow the top line, but to grow the margins double digit, and I would expect about a couple of hundred basis points a year.

Your next question is coming from Jamie Baker from JPMorgan.

Probably for Ed. So I'm curious what internal analysis you've done to assess what peak pretax margins might look like for Delta in coming years. Obviously, that analysis would I have to make a number of industry assumptions as well. I mean hypothetically the industry was doing a 30% pretax margin. You see a new round of start-ups and that sort of thing. And I'm not expecting that outcome. But my point is there's bound to be some structural peak as to what Delta margins can accomplish. So I'm curious what sort of thought and analysis you've put into this and what you're willing to share?

Well, thanks, Jamie. I'm not sure what peak looks like. We're not there yet. But our framework that we brought to the investors a couple of years ago, outlined a pathway to mid-teens margins and sustainable mid-teen margins. So arguably, peak environment might be a little bit higher than that. But when you think about what had to happen when we laid that scenario out, a lot of what we made assumptions around what you're seeing happen.

The structural change in the industry, the most important part of it with respect to the discipline that the industry needs to take in light of high cost, whether it's fuel, whether it's labor, whether it's aircraft availability as well as the cost of aircraft, whether it's the airports themselves incredibly high-cost business. Second, you think about the value proposition that we're creating for consumers. We're no longer competing on price as much as we're competing on value and experience and service, and that's where Delta win. That's where Delta is always one. We're going to continue to lean in there.

If you look at the efficiency opportunities that we know we have sitting in front of us upgauging as was a key unlock back last decade to getting out of the small regional jets and introducing the 321neos and the upgauged narrow-body strategy, we've got a long ways to go there still on upgauging opportunities and fleet efficiency, which candidly is the only way you can grow in the domestic network, given how much congestion there is. And so it will be tempered. It will be modest, but I think it will be very profitable. And you also kind of think about where the world is and while there will be ups and downs and bumps along the way, the sustainability of what we're building because we're building it through a greater experience and consumers having an affiliation for the Delta brand is going to be far more durable than anything this industry ever saw.

I tell groups all the time I started almost 30 years ago, if you were asking, you were there, as someone why they picked a specific airline at least 80% of time is whatever at the lowest price. Today, if you ask a consumer, why did they choose Delta, they'll tell you this place as Delta. And those are the changes. And I think those are durable advantages. And yes, there will be more unexpected surprises ahead, which is also why our balance sheet strategy is so important here to continue to pay down debt and enable us for the first time maybe in our history to play offense once in a while when deficits and challenges occur rather than always have flight defense, get our debt levels down to such low -- much lower levels than they are today.

So that's the view. And that's what -- there's other things as well, but those are the reasons why I think kind of that mid-teens. And the last one I was starting I knew there was one, this technology with AI and I don't know that technology is going to enable us to grow our business. I think it's probably true across most businesses they tell you today, but it's certainly going to enable us to be more efficient and smarter about how we do business. And we already see some early signs and it may take us another year or 2 before you really start to see a meaningful imprint from that, that's coming. And that's not going to be small. I think that's going to be pretty large.

So those are the reasons why I think getting to that mid-teens level is durable and sustainable, and we flat off also in the marketplace. You look at our domestic main cabin performance. I saw a stat recently that we grow kind of get our margins anywhere close to where they were back in 2019, that's easily 2 to 3 points on the overall margin for our business. So it just gives you a sense of the leverage we have here to the opportunity.

Very, very helpful color. And then just a quick follow-up question on segmenting DPS and D1. Obviously, one thing that made basic economies such as success was that the majority of corporations for bad consumption business travelers. I think it was Glen once said something like 90% of your managed corporates had walled off basic economy. I know it's early in terms of unbundling the premium cabins. And I haven't actually had time to check how JPMorgan is going to handle this, but do you expect a similar broad-based corporate response in terms of kind of walling off the basic premium fares. And [indiscernible] of that product predicated [indiscernible] doing so.

Yes. Well, when we rolled it out to Comfort+, we did exactly that of what we did with Main Cabin. And so that's -- and we're moving that through the other categories as well. So we do expect that to be very similar. And all those fares won't be allowed on every single flight that we have either. So we'll use that based on where demand is by flight and by market. So I would expect this to be a positive the top end consumer of first class as you get more and more as you -- more and more flexibility because the basic still, even in the premium cabins are restrictive and that doesn't really work with our corporate customers.

Your next question is coming from Brandon Oglenski from Barclays.

So Erik, maybe this one is for you because I think if we just translate your RASM in the fourth quarter and obviously, expectations for low single-digit CASM, we're getting close to that mid-teens operating margin goal that you guys had long term. But obviously, you want to hit that annually. So how do you think about unit cost inflation in '27 and beyond? And how are you going to manage through new labor contracts and things of that matter?

Well, thanks, Brandon. Appreciate the question. yes, we'll continue to have progress on unit costs as we go forward. We're expecting modest progress, mainly on some of the actions that Dan has talked about and getting our resilience better exit rate in the quarter, some improvement there. So feeling good about modest progress there and then into the fourth quarter.

And as we get back to normalized capacity growth and see those operational improvements, that's when we'll hit our long-term framework of low single digits. So it will depend on the setup next year in terms of where our capacity is. The other thing I'd say is that we're already -- we have all the costs in our baseline. We're top of the industry and our pay scales. We've got our generational airport improvements in our baseline. So our ability to outperform going forward, we think, is going to be strong as we get back to the low single-digit CASM.

And Erik, just a really quick follow-up there because I think you guys have talked about resiliency and staffing this year. I guess is that potentially a tailwind as you look into '27.

Yes, I think it is. We certainly put in quite a number of actions. Some of those take some time to mature. We're seeing the fruits of that labor. But it's not just in our crew resilience. We've got efficiency actions across our system. And as we are -- as we continue to gain growth, you'll see that leverage, right?

During the second quarter, with growth below our plan, we were about flat in terms of our resources versus growth. You start to gain real leverage, and I'd expect 2 to 3 points of our ability to leverage the resources we have and the investments we've made under the growth that will be coming our way.

Your next question is coming from Ravi Shanker from Morgan Stanley.

Dan or Joe, can you give us some color on load factor by cabin and how you're thinking of balancing load factor versus preserving RASM kind of as we kind of go into the back of the year?

So Ravi, load factor just in terms of where it's come out or -- sorry, what are you asking?

Both for how it trended through 2Q as well as kind of how you think that trends into the third quarter, kind of maybe given some of the seasonal changes in 3Q versus 2Q?

Yes. Well, we're going through peak summer. So loads are -- these are the highest for the year. And when we get into -- when you're moving into -- and if you break it down by premium versus main cabin, our premium paid load factor, has been very strong and growing. Through this time period, some of the big bright spots has been our paid premium load factor, while main cabin is fairly consistent in what it was last year. So our capacity that we're putting out, we're seeing load factor improvements through that. So we kind of break it out by both cabins.

And of course, we're going into the peak summer as we said, transatlantic is peak summer. As we get into September and October, load factors generally moderate as your business traffic replaces leisure. And then you've got higher load factors as you go in through the holiday season. So we expect our load factors where we're putting seats and creating seats and to get our capacity in premium is up low single digits. Our capacity in main cabin is actually down 2% to 3%. So that mix is changing. And the great thing about the mix changing is we're actually able to sell a higher load factor in our premium cabins.

Got it. That's very helpful. And maybe as a quick follow-up, forgive me if I missed this, but what is the current status of the refinery or the outage and it is not fully back up yet? What's the timing for that?

Ravi, yes, the refinery had an outage about a couple of weeks ago that was a $0.05 hit to us in the second quarter. We're back up to now approximately 75% throughput of the product that goes through the refinery, but there still will be a tale of the outage into the third quarter. That's going to be a $0.05 to $0.07 hit on the third quarter. Net of that, we still expect the refinery to have a $0.05 benefit in the third quarter. And then based on where the forwards are now, that benefit would increase into the fourth quarter.

Your next question is coming from Duane Pfennigwerth from Evercore ISI.

Nice results, some resumption of the guide, et cetera. Just a question on if you think events like the World Cup are benefiting the domestic entity disproportionately. Do you think it kept more demand in the U.S. this summer, including maybe some premium demand? And then longer term, understanding it's very, very early. As you think about next summer, what entities are best positioned in your view?

The World Cup, like there's lots of events that occur throughout the year, World Cup is obviously pretty big. We're the beneficiary of World Cup. That's not significant enough to make a huge difference to the quarter. But we see it flight by flight. It depends obviously where the games are. And now that you've got unscheduled games, you'll see closer in demand as people are trying to get to that specific city for the game. And I'm sorry, the second part was where the bright spots are for next year.

Yes. Just if you think it tilted demand more to the U.S. and how you think that might play out next summer.

No, I don't think it's going to make a significant difference of how we deploy capacity next year. We really didn't deploy a lot of capacity this year for World Cup. We'll do some additions, but it's actually very small on the grand scheme of the size that we are.

I would put an addendum to Joe's comment there at a much higher level, though, I think the U.S. has done a wonderful job of showing what a great country we are in welcoming visitation and getting the international inbound back again, both visually as everyone has watched the world, you couldn't invest, I think, for a better advertisement to come to the U.S.A. And I do think it will have an impact on the mix in terms of having greater inbound participation in the next year. And while it may not change our specific market choices, I do think it will enhance the mix.

And if I could sneak just one more in. On the co-brand card acceleration that you noted, can you talk about the drivers of that? And is there any sort of geographic push behind that acceleration?

Yes. I think American Express is a great partner, and we're very aligned on our strategic vision about where we grow. And when we go to market, whether wherever we're expanding American Express is a critical part of that ecosystem. And so the growth in cards and the growth in spend is very complementary to how we're both growing and both for experiences, whether we're expanding internationally or Los Angeles or Boston or wherever we or Austin, we're bringing that part with us. It's not just the transactional. It's really a true commercial partnership.

So we're happy to get -- we've got another 1 million cards per year that should be in our sights this year as well as $9 billion of remuneration but it goes with a very tight partnership of Delta and American Express approach the marketplace.

I think one of the wonderful benefits of our relationship with American Express is we're 2 companies that are first exclusive with each other. And to the leading consumer brands in the country will have the exact same strategy, the exact same demographic in terms of who we're looking to reach incredibly complementary and building on each other's strengths. And that's why you see the compounded effect year after year after year. We're not just the largest contributor to the overall distribution of Amex product and cards as well as revenue spend, we're also the fastest growing. And they are our #1 partner in the world, and we are theirs.

And the value you create when you have like-mindedness in the marketplace, it's really powerful. And that's -- you see that continuing. And whether you put out new benefits as we did with replatformed some of the cards earlier this year were other opportunities to leverage lounges back and forth. It's a wonderful, wonderful strategy that we love our partnership. And I know the MAX people feel the same way about Delta.

Your next question is coming from Catherine O'Brien from Goldman Sachs.

I just wanted to dig in a bit on the corporate strength you've been seeing I think back in January, you were seeing a little bit of a pickup in corporate volumes following what felt like a really long period of pretty stable volumes post-pandemic recovery. Can you break down how much of the double-digit corporate sales is fair growth versus volume? And if we were to see volumes pick up, like how meaningful could that be premium cabin pricing given there's been continued strong demand from high-end leisure travelers as products and [indiscernible] dynamic?

Catie, most of what we saw in the 20% has been on the fare side. We've seen some improvement in passengers. A lot of it has been in international, depending on the specific city that we're focused on. Some cities are growing faster than others. But most of it's been through the fare environment. So there is lots of upside for the future on additional volumes. But it's been great to see the resiliency of the corporate demand.

Okay. Great. And just maybe a quick follow-up on medium and main cabin trends. I guess, first, could you just -- you gave us some color on the seeds. But could you just tell us what premium versus main cabin RASM growth was in 2Q? And then given the tougher comps and premium and the reduction in low-cost capacity over this year, are you anticipating main cabin RASM could outperform premium underlying your 3Q guide? Or obviously, I know Delta has been cutting main cabin seats that maybe looks a little bit different than the rest of the industry. Any additional color there would be helpful.

Yes. Well, actually, in the second quarter, our unit revenue in main cabin did exceed premium because we are down in capacity. And the industry has removed significant amount of unprofitable capacity. If you look at the ultra LCC category that capacity is down about 30%. So main cabin has gotten significantly healthier this year. I mean last year, it was one of our biggest objectives to improve the main cabin.

And also, we're not growing main cabin seats. This is a multiyear several years in a row that we haven't grown this cabinet, and we won't be growing it next year either. But our premium revenue has been up 17% and unit revenues below Main Cabin, but our growth in that category has been up high single digits, while revenue is outstripping the capacity and premium revenue. So I think we're getting into a really good balance between main cabin and our premium cabins.

Your next question is coming from John Godyn from Citigroup.

Ed, you're the longest tenured CEO in the industry. You've seen a lot over that time. So I know that you don't take guiding to what will be a historic and record 4Q earnings number likely. And if you hit that guidance, I think the bigger ideas would be set up for a major 2027 breakout year just based on the simple math. So I know people have come at this in different ways on the call, but just to kind of have everything in one place.

Can you talk about how the slow and consistent changes in the industry and at Delta compounded to set this situation up? And why should we all have confidence that this inflection we're seeing is in a head fake and is sustainable beyond the end of the year?

Sure, John. Thank you for that. The results you're seeing here in the forecast into the back half of the year, '27 and beyond is entirely consistent with what we have previewed to the street over quite a few years, and we talk about creating, getting out of the commodity cycle many years ago and the pathway to doing, I think we used to call commoditization. Today, we're up to premium strategy and tomorrow, we'll find a more elegant turn forward to the future.

But it's about building a sustainable business model that generates great returns for all these constituents. So great rewards for its customers who are loyal to the airline. Great value to its employees through profit sharing and the rewards of working at Delta and the working for the world's best airline, great for the community and certainly great for our investors. And this is a pathway that I see continued growth. I don't think we're anywhere close to where we will eventually stabilize that. And even when we get to stable, there's always going to be a next beyond that. So I think the consistency of the strategy and the alignment, the fact that you've got a leadership team who's been here for not just me, but everyone around this table has been here for a lot of years.

We all think alike the 100,000 people of Delta understand the strategy, and they're all focused on service. And it's about what you can do when you put people first. and you make service your goal. It's not about trying to outsmart somebody on some network strategy or trying to undercut somebody on a lower price point. Is it about who serves best and who creates the best experience. And that's Delta, and it's Delta objectively, not just that I'm obviously biased. And that's what generates the returns. That's what generates the premium revenues and that generates our opportunities to continue going. And I don't see any end in that.

We'll now go to our final analyst question.

Your final question is coming from Savi Syth from Raymond James.

Just to clarify with your kind of focus on international over the next few years. Just taking a longer-term view, how do you see the kind of capacity growth in the kind of domestic market versus opportunity in international markets? Just wanted to put a fine point on that as you think longer term?

I think longer term, the domestic market is -- moves with the economy. International has -- in international for us, will grow faster than average just because there's a lot of economies that we still don't serve, and we'll grow faster than the domestic market. And so I kind of look at our domestic we think about becoming more efficient on a good part of capacity for the future in domestic will be efficiency, as I said, about gauge growth and getting back to a positive gauge growth because we don't have a problem with demand, so larger airplanes make us more efficient and give you that extra capacity. I think there's going to be parts of the U.S. that we're focused on, where it grows faster than average, where we can find premium markets like Raleigh-Durham's and Austin and Los Angeles is in place like that. That we can continue to enhance the ecosystem for domestic.

So I see a lot of efficiency in domestic based on our utilizing our current hub structure. International, most of it is going to be Asia and Middle East as we continue to add economies that we don't serve. And a lot of it is looking at our customers have a high demand to go to those destinations we don't fly to like Hong Kong that we just that we just started or Melbourne or other places in South Pacific and Southeast Asia. And we've got a great anchor partner in Asia with Korean Air. That allows us to expand ourselves through 70, 80 destinations through Asia, and now we have access from all of our hubs. So I think you'll see international grow faster than average. Domestic will be -- the theme will be much more of efficiency.

That's helpful. Just to follow-up on that. So does that put Europe in kind of Latin America kind of somewhere in between?

I see Europe also as efficiency. When you think about the aircraft we've got coming online with 787 that -- if you think about a 787 that replaces a 767, that's a significant amount of efficiency in margin. Premium, going from 30% premium seating and a 7.6% to over 50% in a 787. It can handle twice the cargo. So I think Europe falls in Europe, the continent of Europe falls into the bucket of domestic of efficiency, but on the wide-body side, which actually is a multiplier on gauge in long-haul international because of fuel burn and top line revenue that you can generate. So I kind of put the continent of Europe in the domestic bucket.

South America, we still have some opportunities with LATAM. They've got fantastic hubs that they're developing like Lima, Santiago, Sao Paulo, Bogota, that we're working. And we're in the early stages with LATAM and Korean on our development of our hubs. But typically, our JV partners is the foundation of our profitability and our strategy in those regions. And we've got great partners to launch to work with.

Okay. With that, that will conclude our second quarter earnings call today. Thank you, everyone, for joining us, and have a wonderful weekend.

Thank you. That concludes today's conference. Thank you for your participation today.

Awesome. All right, everybody, back on the airlines track on Day 2 of TD Cowen's 10th Annual Future of the Consumer Conference. We're super excited to be joined today by Ranjan Goswami, Chief Marketing and Product Officer for Delta Air Lines. Ranjan, before we begin, any safe harbor statements you need to make?

Yes, please. We'll be talking about expectations and plans. Obviously, factors can change that, and you can read about those implications in our SEC filings. So thank you.

Awesome. Thanks so much. So before we get into just how you're thinking about the future of the consumer and loyalty, you were recently appointed to this role. Would you mind walking the audience through some of the teams and verticals that fall under your strategic oversight and what your key priorities are?

Sure. What we've done is we've essentially brought together product design and end-to-end design and marketing. And the idea is that the brand is the product and the product is the brand. And so if you bring these teams together, you can start to set up that promise for what the experience will be and then ultimately deliver against that promise and exceed those expectations. So that's the sort of why behind the what of bringing these disciplines together.

I think when you put your consumer hat on it, what's really exciting is there are 4 capabilities that we're driving by doing this. One is a data capability. So if you think about marketing organizations that look at audience segmentation and that kind of data to target you for conversion or an action we want you to take. And then you think about the customer experience, and we have all this data about your actual experience, when you bring this -- what is fundamentally customer data together, that becomes really powerful in how you can really one-to-one deliver a message, right? So if you have a poor experience the week before, my -- the way I set up another action I want you to take this week can be customized. So there's a data piece on this, which we're calling ultimately customer intelligence and personalization.

Second key component is really putting all of our channels together and orchestrating channels. The airlines and especially Delta, we have so many owned channels that are logged in authenticated -- identity authenticated channels. Think about our app, you think about the website, WiFi, the in-flight screens, and more. And so now we can really orchestrate all of these channels by sending you the right message at the right time as you go from channel to channel. So this integrated marketing and channels orchestration is the second piece that we brought together. We used to have some of these channels sitting in customer experience, some sitting in marketing, but now all sit together.

Third, end-to-end brand experience. So how do we think about how our people show up, how the operation shows up, the physical experiences and the digital experiences, all in end-to-end journeys. And so now we brought that together. And then the final piece is on partnerships. Delta is now a platform for partnerships built around our loyalty program. The best consumer brands in their categories want to partner with us. We want to partner with them and how do we think about that holistically. So when you think about the data capability, channel orchestration, end-to-end brand experience and a partner ecosystem, all of those things start to come together in a very exciting way.

And then how do your nearly 22 years at Delta and Northwest inform your approach to the role? Can you talk about some of the prior initiatives that you've worked on?

Sure. Well, it's funny, 22 years ago, I was putting CRJ200s into the market. These are 50-seat airplanes that today, no one likes. And in fact, today, Delta doesn't have any of them. So it just tells you how fast the industry is changing, especially as Delta has upgauge the airline. But I'd say a couple of things. One, spent some time out in California for 7 years with Delta. They're overseeing our B2B sales there and also orchestrating what was our terminal investment in L.A., a $2.3 billion investment that's now really given us the catbird seat at that airfield, right? 32 contiguous gates over 3 concourses. What was exciting about that was learning about the combination of you need to fly, you need to be where people want to go. L.A. is the second largest market, and you also want to have the right experience with that, right? And that's why we've invested so much there.

So learning about how, obviously, the network meets the terminal experience to really create that opportunity to grow. Today, we're #1 in L.A. as an example. [ COVID ], I oversaw our 25,000 flight attendants at that time. At Delta, our people are truly the brand differentiator for 100 years. We've had a special relationship with them. They are the brand. And we were 1 of only 2 airlines, I think the only big airline in the world that didn't furlough a single person. And that's because we work together to create a strategy to get through COVID.

So I would say how do we take Delta people and make them front and center of the experience is such an important part of what we do as well. Most recently, obviously, working on the customer experience and really elevating that. And what we like to say at Delta is no matter where you sit on the airplane and where you choose to sit on the airplane, it's going to be a best-in-class experience. If you want a main cabin experience, it's better than anyone else. If you want a Delta One experience, it's better than everyone else. So looking at all of those things from kind of our 360 view has been really helpful. What I would also say that's absolutely critical is a listening architecture that you need to understand what consumers want so that as marketers and as product designers, we can bring to bear the right messages and the right products.

And we have stood up here 24 listening posts for an always-on listening. We get -- our customers are invested in our success. They want to tell us things. They want us to succeed and get better. And so we now have a real flywheel here as it relates to not just broad experiences on our team across the airline, but also now the data that really informs those decisions.

And then throughout your time at Delta, the company has been investing significantly in the customer experience in leading the industry on the premium travel, which has been a really exciting secular theme for airlines over the last 10, 15 years. In addition to some of the initiatives you just discussed, what other differentiators do you think are key to the last 1.5 decades of your investments to decommoditize travel?

Well, I think it's been a really deliberate strategy. The first building block was fundamental reliability, right? We needed at scale to deliver on the promise, which is a promise of time. And ultimately, if we fail you in that promise, no matter how good all the other things are, it's not going to land well with the customer. And so we've built that foundational reliability layer, which has been key.

Second, on top of that, we talk about the Delta people. When you look at our NPS, the #2 driver beyond reliability is the people of Delta. And so how they show up to make it a more personal experience and connect with you. So even though we carry 500,000 to 700,000 customers a day, you want to be seen as an individual, right? No one wants to be treated as a number.

Third, we have to go to where people wanted to go. And I think 15 years ago, we did not have hubs in Seattle, Los Angeles, Boston and here at LaGuardia. And Delta over those 15 years, built a system and leadership positions in these critical markets in addition to our core markets. So that also was a huge piece.

The next thing we did was we really created choice for the customer onboard the airplane. So if you think about it, there's no Delta airplane with less than 3 classes of service, and many of our airplanes have 4. We've got Delta One. We've got Delta Premium Select, domestic first class comfort -- Delta Comfort and Delta Main. So that allowed really allow customers to choose what kind of experience they wanted. As you probably all see most recently, we've now further segmented within each of those product experiences to make basic, classic extra. So choice is critical, and I think we really created choice, but we wanted to make sure we were open for business for all customers at all price points.

But again, with this notion that no matter where they chose to be on the airplane, they would have a best-in-class experience. So those are some of the real, I think, pieces that have been critical to our success over 15 years. The final piece I would say is the loyalty ecosystem. So if you deliver a product consistently and on that fundamental promise of time and then you layer in amazing people and you layer in flying to where people want to go and giving them choices of where they want to sit on the airplane, you now give them a loyalty ecosystem that makes them really want to come back to Delta. And we've delivered on a loyalty program with both partners that are not just travel adjacent but everyday partners that allow customers to feel really connected to Delta. So all of those things together, I think, have been a consistent strategy over these last 15 years.

And how important are those in terms of building trust with the consumers and then having that trust associated with your brand?

Yes. Trust is everything. I mean every brand is based on trust, which is why that reliability piece is ultimately pretty fundamental. What I would say is we today have a 15% unit revenue premium versus the industry. We've commanded that lead for well over a decade. We're very proud of that lead. And that demonstrates trust, right? When customers come back to you and say, I'm willing to pay you a premium, I feel like that premium is worth it. And so whenever we look at our data on customer sat, we're trying to understand, are we overdelivering versus what we said.

So we look at it in 2 ways. The first is what we call a blue sky experience. When things go according to plan and the customer does not detect a failure, we're now a 70 NPS brand, which is really exciting. Now what we want to do because that's the largest number of customers have a Blue Sky experience with us is how do you accelerate into that. So this is where the data comes into play. I'll give you one specific example using the people of Delta as our superpower. We've identified specific behaviors that if those behaviors are exposed to a customer in a blue sky experience, on average, that NPS will rise by 70 points.

So things like that deliver that trust, right? So that's blue sky. We also know our airline industry is exposed to ATC, weather, other types of delays. And so we are maniacally focused also on measuring when it's a gray sky experience, what's the trust factor there. And I think customers realize that things will happen, but what they want to know is that you care about it, you apologize for it and own it, you communicate proactively and you tell me what to do next.

So now we have a whole apparatus of notifications and again, how our people together with technology show up, which we know drives those negative NPS scores up by 50 points. So trust, I think, is a couple of factors, right? One, are people willing to pay you? Two, are you focused on the right things as it relates to a blue sky experience? And then when things go wrong, what's your recovery experience like? We're focused on it from both ends, and I think that's why we're leading the pack as it relates to customer experience.

That's really exciting. We have a lot of generalists in the room today. It's a broader consumer conference. Would you just mind walking through how some of these differentiators and consumer-focused investments then help to create a positive flywheel with customer loyalty and engagement with the program?

Yes. I mean, listen, I think the flywheel is straightforward. Deliver a really great predictable. It's really important in our business. You can't have surprises with the customer, right? They've got to appreciate that what you said is going to happen is going to happen. Make that a delightful experience in addition to predictable, right? So all the things that we've done in each cabin to do that and then repeat it.

And you've got to repeat it at scale. And we tell our teams every day, the clock resets to 0 at the end of every day. So we have 5,500 flights yesterday, we're going to have 5,500 flights today, that's continuous, right? And when you're talking about the numbers that we have, 0.5 million to 700,000 customers a day in the Delta system, that consistency is important. So if we do that well, together with this loyalty piece that tells the customer, hey, when you keep coming back to us, it's not just for a great experience, but we're going to reward you with really great perks and benefits either in the moment or in the future. Ultimately, like any generalist would do is say, is the brand becoming more sticky, right? And we believe we're driving that.

Yes. Okay. So now we know where Delta sits today. How do you keep innovating to drive customer loyalty, stay ahead of your peers? A lot of your peers have copied some of the strategies that you've demonstrated over the last 1.5 decades.

Yes. Listen, innovation is everything, and you got to stay ahead of the game. And I think the good news here is we have so many proof points of being able to look at where that puck is going. I'll give you a couple of examples. Back 15 years ago, we realized that connectivity was really important. And at that point, we decided to put paid WiFi even on our 2 class RJs, as you might remember, only airline to do that. Fast forward to just 6 years ago, we made the strategic decision to say, you know what, WiFi needs to be free, right? No one had done that either. Everyone is sort of doing that now as we speak.

I'll give you another example, premium seats, Delta One. These are customers going across oceans, long-haul flying, they want to sleep, right? We realized 15 years ago that you needed to have flat beds with direct aisle access. No one wants to be stepped over to go to the aisle or they need to go to the bathroom, right? So we set that in motion. The whole industry was still at angle seats with step over.

And then 10 years ago, in 2016, we said, you know what, how do we make that Delta One experience even better? Let's put suite doors in front of it. And now we have 50% of our wide-body fleet with suites. Everyone else is now saying, let's now put a door in front of it. So the reality in this business is people will copy really good ideas. The question for us is how do we make sure we understand what the consumer wants and meet them faster than anyone else.

And I think in every one of these examples I've given you, we've set the standard. And then like the Golden Gate Bridge, right, you come back on and when you have a fleet of 1,400 airplanes, it's going to take some time to redo things. But in every one of these things, we are appreciably ahead.

Would you walk the audience through Delta Sync and the role that plays and what engagement has been like among SkyMiles members?

Yes. So this has been a really exciting journey. As I mentioned earlier, we, at the airline and at Delta specifically have so many owned channels where our members are logged in, and therefore, we can personalize the experiences that they have. What we did with Delta Sync was, one, we said and stepped back and said, WiFi shouldn't just be like electricity in a room, that's really expensive. What we want to make sure is to have really good quality WiFi, but make it a data full approach. So what do we mean by that?

By making it a member benefit, you log into WiFi. And any device that you bring in, you log in and you get to Delta Sync WiFi. But not only do we give you the entire Internet, which is, of course, what you want, we also give you a whole host of things to think about and do and sample and experience in that ecosystem, right? And that's now commanding 30% of our customers who log in Delta Sync WiFi are staying with us in that environment that we've created. So what that tells you is not only do people want to get on the Internet, but if you give them really good personalized experiences to sample and experience, they're going to want to stay with you there.

Similarly, we wanted to make that seatback screen a smart screen like the TV you have at home. And we believe for many years now that seatback screens are table stakes. Everyone wants a multiscreen environment. At home, you have the TV going, you have your phone going and you've got your laptop or iPad. Same thing on the airplane, except that it's praying Mantis, in not a lot of space, right? So we've got to provide you one of those screens, which we have done now 168,000 in counting. But the difference is those screens weren't a logged-in environment. But when we sat back and said, okay, let's connect the aircraft and let's connect every device brought on the airplane, whether that device is brought by a customer or that Delta provides the customer in these screens, we can make that a logged-in experience.

So Delta Sync seatback now is on over 400 airplanes. The log-in rate for that using your birthday is over 40%. Meanwhile, Delta Sync WiFi log-in rates for WiFi and your personal device are approaching 50% and now 30% of those customers are staying with us. And in the case of the seatback, right, they're interacting with that seatback screen for the 2.5 hours are on the flight. So when we think about owned channels that are personalized, identity authenticated and now the customer is using these channels over the course of their entire travel day, oftentimes in the connect itinerary, but at the very least, every flight 2.5 hours, this allows us now to market more Delta products to them and messages. It allows us to tell them about their journey, right? You need to know about your carousel and your connect flight, not everyone else is onboard the airplane. It allows us to have persistent preferences like what movies are favorite for you or where you want to pick up where you left off or those types of things.

And so now all of a sudden, you kind of log into these Delta channels onboard the airplane, and it's like we know who you are and we know what you want. You then put in third parties on top of that, and this becomes a really exciting flywheel. The question -- the point I want to make is you don't just build these things overnight. You've got to get connectivity at scale. You've got to get screens at scale. You've got to get a partner ecosystem at scale. And then you've got to build the actual digital formats that allow the customer to have a personalized experience between their devices and the screens. But we are really leading the charge on this. We believe in it deeply, and this is what Delta Sync is all about.

Yes. And then that's a great point on how long it takes to build those up. It's not something like putting in a bag for you, but you can replicate overnight. You made the point on connectivity. I think that will be a good segue into Amazon LEO. You recently announced an agreement for initial installation, I think, 500 aircraft starting in 2028. Could you walk us through how the advancements in satellite technology are enabling this new frontier for in-flight connectivity?

Yes, for sure. So as I mentioned, we've seen connectivity as a critical customer need for, gosh, almost 2 decades, right, when we went into full paid WiFi across every airplane and then decided to go free 6 years ago. Today, we are at 1,200 airplanes with free WiFi. There is no other airline at that kind of scale doing that. And we've done that, by the way, for 4 years. So we have good track record in this. And what is -- what we're learning in this like with anything is technology keeps getting better and better.

Our existing partners today, Viasat and Hughes are improving their own products. And Amazon is setting up a constellation that will be a best-in-class constellation as well. So when you have 1,400 airplanes, what you want to make sure you do is you have a multi-supplier, multi-partner ISP strategy because that allows you to have -- deal with risk mitigation, et cetera. So these 500 airplanes that are coming to Amazon LEO, they are a combination of new delivery airplanes as well as airplanes that are coming off contract, some of our earlier airplanes we put on free WiFi. So that's how we're thinking about this.

So I go back to the Golden Gate Bridge, right? You finish repainting it and then you've got to start over again. And the same thing here is true as it relates to this. What is really exciting about where Amazon is thinking about this and for those of you who are satellite people and know about capacity and speeds and latency, we're talking about 1 gigabit on the downlink to the aircraft and 400 megabits on the uplink. That is really incredible. That is better than anything that's out there today.

What does that 400 megabits on the uplink mean? It means that when you go on a trip to Rome, on your flight back, you can upload every photo, do all of the things you want to do, all the stuff that you always want to get to and never quite get to it because life takes over. But imagine being able to do all of that on that return 10-hour flight back to Kennedy, right? And so this is the kind of next advancement as we think about this. Having said that, I do think it's really important to point out a couple of things. We have just installed the first time on any airplane anywhere in the world on a 717, a dual-orbit antenna system with Hughes. What does that mean? It means we have one antenna for GEO satellites and one antenna for LEO satellite. LEO is what Amazon LEO, Starlink and others are using. GEO, of course, is what Viasat and others are using.

So now we have a dual antenna system. It's on our 717. It's coming to our 321neos next year. It's coming to the 350-1000. So that's going to appreciably make the experience better. In addition, for Viasat, a brand-new satellite that has more capacity than all of their satellites combined is now in place and will cover the Americas, and we will be the first airline to switch over to that. So when we think about this, on 1,400 airplanes, you've got to take this view that's very methodical around all the steps you need to have, all the providers you need to have and that renewal strategy over time as well. And Amazon is a critical part of that future, which we're really excited about.

Within Amazon's satellite capabilities, I think some investors were curious if there's any impact on the Blue Origin incident recently. And maybe just touch on that quickly.

Sure, sure. So as you can imagine, getting a constellation up into space requires a lot of launch capacity. The good news is Amazon has multiple launch capacity providers. They're using ULA, they're using SpaceX, they're using Ariane, they're using Blue Origin as well. We still feel very confident about our 2028 time lines. There was buffer built into that. They're buying more launch capacity as we speak, and we've got every bit of confidence in them.

Okay. That's great to hear. Delta has partnered with Amazon via AWS for a long time. Now the partnership seems poised to expand in a pretty meaningful way. What other additional initiatives might something like the LEO agreement enable, especially with Delta Sync?

Yes. Well, listen, I think this is the key difference with Amazon. They're not just pipe to the airplane. They're the biggest consumer brand in the world. And when we think about things and use cases like shopping or content or gaming, right? These are all places where Amazon plays in a really big way. We are a full AWS shop. We've taken 600 apps into the cloud with them. And so we believe there is a back-end opportunity to create delightful experiences for our customers onboard our planes. And we certainly think that their consumer businesses can really add to what we've already done on Delta Sync. So more to come on this, but it is connected. And we're thinking about it as a true platform, and they play an integral part to that.

And could that even potentially be something like driving engagement, not even just on Delta Sync, but even on the ground too in their day-to-day lives like you've done with other partnerships?

Absolutely. I think the way we've got to think about all of this is the airline sits at the center of a partner ecosystem, and we've seen brands in every category, right, from payments with Amex to mobility with Uber to coffee with Starbucks, Airbnb, you name it, all the content providers that want to be associated with us, they realize that the flight and the quality of the audience are reasons to be a part of the Delta ecosystem.

And at the same time, they also recognize, as do we, that the flight ends and you go on with your life, right? And hopefully, you're going to come back to another flight. But that connectivity on the ground and the experiences that you take on the ground is as important, which is why on Delta Sync, what we've done is every experience that you have, whether it's Paramount or Fox One or New York Times or what have you, you get to -- it's portable. You don't just get to sample it on the airplane, you get to take it with you for 24 hours or 14 days, right? And that allows you to now really understand that particular product. So that's the same type of thinking and lens we would have ultimately with Amazon.

It's exciting. And I think that kind of gets into the topic of commerce media, which has been a big focus area for across the consumer landscape in recent years. We've written about it here at TD Cowen and definitely think there's interesting opportunities in the space for brand loyal airlines like Delta. There's a wide variety of approaches and definitions to Commerce Media. How do you think about it?

Well, first, thank you for writing so much about it because I think it's a really interesting space for the airline business, but especially for Delta as well. The way we think about this is the experience has to be personalized. So if you're going to go and interrupt the experience with a bunch of random ads, I don't think that's what customers want. And I think people reject that ultimately. But if you make the ability for other brands to take part in a way that is part of the experience and that is ultimately personalized, then I think you're talking a whole different category. A few of us were talking earlier today, when you go through your Instagram feed, most of the ads that they're sending you don't feel like ads because they've really gotten to know who you are and what you like.

And I think that's incumbent upon us as we look at Commerce Media Network application to the airline business, it's about the experience first. And if you do that, I think you're going to have better outcomes for third-party brands anyway. So how have we thought about this? What Delta Sync is ultimately is it's experiences that we're putting in front of our members. So the first obvious benefit is WiFi -- your membership unlocks WiFi, right? It unlocks your screen, it unlocks your devices. Then you get into this environment where now all of these brands want you to sample their product.

So we started this journey with Paramount, right, where you can have the entire Paramount Showtime library bless you. And you can get all of that, right, to essentially the customer to be able to enjoy and then take off the airplane, very successful. We're giving millions of leads to a company like Paramount. We then moved into YouTube Premium, right? YouTube without ads. It's an amazing thing -- if you haven't experienced it, try it, right? You can try it on an Delta airplane. By the way, you can then experience it for 14 days.

And then we moved into anime, Crunchyroll, the largest anime OTT service for all of the anime fans out there. Then the New York Times, All Access, you get the Athletic, you get Wirecutter, you get travel, you get cooking, you get news, right? The entire New York Times is unlocked onboard the airplane for you. Now Fox One. So now you're going to have MLB Sports and FIFA World Cup. And again, you get to take that with you for 24 hours. So this is part of the experience.

And why do we choose all of those brands to be part of this network is because what people want to do on the airplane is be entertained. That's the #1 use case. They spend all that time on those screens, watching movies, watching short series, et cetera. And so we said, you know what, the first use case we should have when you lean into an experienced network like this is those types of brands. So we believe fundamentally in this concept of a media network. We believe more fundamentally that it has to be experience-led and ultimately personalized.

So imagine a world now where you're going to Paris, right? And now when you see log in a Delta Sync WiFi, you see a YouTube spot about Paris. You see a Paramount title about France, right? And now you can -- you see a New York Times food article about baking a croissant, whatever it happens to be, all of a sudden now you can think about all of these partners helping you curate and getting customers excited about their trips. So it has to be contextual, has to be personalized, which is one of the reasons why we started with logged in authentication and really putting partners on board the platform that the customer says, you know what, this could be something that really add value to my trip as opposed to feeling foreign and random.

Now the wealth of high fidelity data and the capital I mean, it's a perfect platform for you guys and a lot of white space. What is engagement? I mean you've built up this suite of nonair consumer partnerships, a lot of leading brands, Delta, Starbucks, Uber -- what has engagement been like with some of these partnerships? And how does that help you get top of wallet among consumers?

Well, it's really exciting, and this goes back to the thesis that Delta is a platform for brands and an ecosystem, right? And ultimately, this loyalty program is the wrapper around all of it. But if you look at the Amex relationship, right, payments, such an important everyday thing. You have 9 million people with the co-brand card. That spend is approaching 1% of U.S. GDP. That's kind of incredible when you think about that. That's our best example of a partnership that has been tried and true for decades, and we've built everything around that.

Starbucks, we have 4 million linked accounts on Starbucks, right? That's incredible. In fact, initially, there was so much demand for it, the linking system actually went down for a couple of hours because problem -- it's a high-class problem, right? This is what's so cool now, right? Starbucks is an everyday brand. So many of us stop by Starbucks every single day. Now when you go to LaGuardia, right, you get your double Star points on your day of travel, right? That's awesome. You're thinking about Delta. And then by the way, you have to still have the coffee on board the airplane as well. So a real cool extension for both brands, quite frankly, great exposure, great relevance as well.

Uber, we're at 2 million linked accounts and counting, which is, again, really exciting, where you get benefits and miles by using Reserve using Uber One, of course, your rides to the airport, right? Airbnb, we just started linking accounts there. So just early days yet, but really excited about that. So all of these brands have real high engagement because people want to basically earn those miles, right, and organize their everyday life around maximizing their ability to travel. And I think this goes back to this experience economy that we are in and where people are saying, I want to prioritize experiences in however short or long my life will be because we all have that COVID memory, right? And we're seeing that.

And by the way, it's amazing this year, year-to-date, we've had 65 days of over $100 million in cash sales in our direct channels of the app and [ delta.com ]. Last year, that was only 19. So we're talking about 3x $100 million days on people buying experiences, right, going on trips, trips of a lifetime on Delta directly with us, which is just really incredible. So anyway, this whole ecosystem, I think, is very exciting.

Now you add on all these content partnerships on board the airplane, right, where millions of people are now exposed to all of these things. So the ecosystem is robust. It's highly engaged and it's growing. And watch this space. I mean, next month, I wish I could talk about it right now, but you're going to see 2 really cool new things happen on Delta Sync, one with an existing partner, a long-time partner and the other a brand-new partner. And you're going to see us do more in lodging, and it's -- we're just getting started.

I can't wait. I look forward to the announcement. How do you think about just choosing partners in your portfolio? Obviously, you've got a really exciting. It sounds like some more ones coming. But how do you think about evaluating...

Well, partnerships have to be a win-win. I think the first filter is does the brand align with our brand. We are -- and I say this humbly, but we really believe we are the leading brand in this category, and we want to think of ourselves ultimately as being a leading consumer brand. That is our aspiration. And so therefore, we want to partner with like-minded brands that have both share the values and also share the premium of how they think about their brand. And again, when I use that word premium, I want to go back to the fact that no matter where you choose sit on the airplane, it should be a best-in-class experience, right? It's not just for people who buy Delta One.

We want to be an accessible premium brand across everything. And so we look for partners that have the same type of fidelity in how they think about their brand. And let's go through the list again, right? Amex, the leader in payments. Uber, the leader in mobility. Starbucks, the leader in everyday coffee, breakfast, whatnot, for that third place. Airbnb, the leader in experience travel and experience lodging, all of the content partners that we've talked about. So -- that's the first filter.

The second filter it has to be a win-win for both sides. So how are we driving accretive value to the partner and to Delta? And what's great about that is there are so many value levers we can pull for value, right, whether it's awareness impressions, whether it's mileage earn and burn, whether it's experiences at the airport, right? And then we try to look at weaving these things together, and I'll give you a great example, right? I'll be heading to LaGuardia later here, and I'll be taking an Uber Reserve. I'll get a great deal on that because of the Delta Uber relationship, right? It's a travel day, so I get my double star point. And then I'll be able to get on board the airplane and ultimately, if it was next month or later this month, watch FIFA World Cup live on a Delta flight. That's awesome. That's an experience. That's not just a seat in the air. That's an end-to-end experience that is weaving together partnerships in a very cohesive and very intentional way.

I think that's what customers want, right? They want not commoditized experiences. They want someone to have thought about it and invested in the experience, which is what we're committed to doing. So that's kind of the lens, right? It starts with is it brand-right? And do they have the same approach to their category? Is it accretive to the experience? Can we weave in and make these end-to-end experiences? And then is there a real value creation for both sides?

Yes. No, that's going to -- deepens the relationship with them builds that utility. And one other coming up on time here, but I'd love to -- and I'm sure we could spend a whole hour on this. But obviously, AI is a major topic right now on all vectors of the economy. Where do you see potential for AI to enhance the customer experience and maybe things like Delta Concierge, which you guys have teased at CES in years passed.

Yes. Well, clearly, it's such an exciting opportunity. And we talk about our people being the superpower of Delta, and I think AI can help augment that -- augment them to be even bigger superpowers, right, and spend more time connecting with customers. That's kind of our general frame on it. What I would say is Delta Concierge is really exciting because it can take what are more complex transactions that take a lot of back and forth and turn them into natural language ways for you to kind of transact with us.

So right now, 5% of our app users are included in the beta on Delta Concierge. And we just launched rebooking and cancel as opportunities, and it's working really well, getting really good feedback on that. Next month, that 5% will go to 100% -- and so you're going to see us really leaning in here where that tool -- by the way, another channel, right, another logged-in channel that we've essentially created here. So this ecosystem of channels and orchestrating those channels, very powerful. But we're going to lean into that. What I would also say is AI is going to have real opportunity for us as we think about customer feedback. And what do I mean by that? You can now create synthetic panels to understand how customers might react to a new product design or a loyalty program change.

Sometimes you're working on top secret things that you don't want to talk about, right? And you try to do NDAs and whatnot with research focus groups, but we can now do synthetic panels, which means we can also survey you less, people are getting survey fatigue. We love the fact that they want to give us feedback all the time. But how do we get smart about collecting that feedback and how do we create these panels that allow us to really lean into consumer insight but in a much faster way.

So I think the -- these are very broad. I've talked to you about transactions on the one hand, all the way to how we think about consumer research on the other. And I think there's a lot in between. I think the question for us is let's stay real focused on what matters to the customer. And once we use that, think about how AI can help us in an efficient, economical way. We want to be very methodical about it. But clearly, a lot of opportunity in this space.

That's fascinating. Ranjan, we're up on time, but we've gone through a lot of really exciting things at Delta today. Anything you'd like to close with us?

Just one, thank you for the interest, and thanks for including us on the agenda, Tom. I hope what I've tried to convey to you is we are very much committed to a brand experience. And we believe that, that brand experience is multifaceted. We think we are leading the pack as it relates to how we're thinking about it, how we're very future-oriented, and we're very methodical on how we're going about it. And we're seeing the proof in the pudding, right? Even in a very uncertain situation right now in the world, demand remains very strong and resilient. Corporate is up, premium is up, main cabin is up. And I think that speaks to the -- both durability of the brand and also the resiliency of our customer set, which is probably the best quality customer audience in the airline business.

That's terrific. Well, Ranjan, we can't thank you enough for be here. We learned a lot today. It was a fascinating conversation and hope to continue in the years ahead.

Thank you so much. Appreciate it.

Thank you so much.

Good morning, everyone, and welcome to the Delta Air Lines March Quarter 2026 Financial Results Conference Call. My name is Matthew, and I will be your coordinator. [Operator Instructions] As a reminder, today's call is being recorded. [Operator Instructions]

I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations and Corporate Development. Please go ahead.

Thank you, Matthew. Good morning, everyone, and thanks for joining us for our March quarter 2026 earnings call. Joining us from Atlanta today are our CEO, Ed Bastian; our Chief Commercial Officer, Joe Esposito; and our CFO for the March quarter and recently named Chief Operating Officer, Dan Janki. We're also joined by our recently named CFO, Erik Snell; and President, Peter Carter.

Ed will open the call with an overview of Delta's performance and strategy. Joe 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. [Operator Instructions] And after the analyst Q&A, we'll 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 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.

And we'll also discuss non-GAAP financial measures. All results exclude special items, unless otherwise noted. You can find a reconciliation of our non-GAAP measures on the Investor Relations page at ir.delta.com.

And with that, I'll turn the call over to Ed.

Thank you, Julie, and good morning, everyone. Thank you for joining us. Before we begin, I want to acknowledge the ongoing conflict in the Middle East. Our thoughts are with all those affected and we remain hopeful for a peaceful resolution.

Turning to our performance for the March quarter. Our results underscore the power of Delta's brand and the durability of our financial foundation. We delivered earnings that were 40% higher than last year and consistent with our January guidance even with the significant step-up in fuel and several external headwinds.

Our strong results were driven by record revenue, which grew nearly 10%, increasing more than $1 billion over last year. Demand was broad-based across corporate and leisure, with continued momentum in high-margin, diverse revenue streams. As a result, we delivered a pretax profit of $530 million and earnings of $0.64 per share, with $1.2 billion of free cash flow and a 12% return on invested capital.

Our results are powered by the Delta people who will always be our greatest competitive advantage, and I want to thank all 100,000 members of the Delta team for their commitment to delivering for our customers each and every day. For the seventh year, Delta's people-first culture has earned a place on the Fortune 100 Best Companies to Work For list, moving into the top 10 for the first time.

When Delta succeeds, so do our people. In February, we celebrated $1.3 billion in profit-sharing payouts. Similar to last year, this was more than the rest of the industry combined.

Looking at the current environment, demand remains strong. The acceleration we saw in March is carrying forward into the June quarter. Over the last month, cash sales, which are the clearest indicator of demand, are up double digits, with strength across the booking curve, geographies and products.

Our consumers are continuing to prioritize experiences, with travel among the top spending categories. We are seeing this in continued double-digit spend growth on the Delta American Express Card portfolio, building on last year's double-digit growth.

Combined with strong corporate trends, our customer base is showing greater resilience to macro and geopolitical uncertainty. The war in the Middle East has driven an unprecedented spike in jet fuel with prices roughly double what they were earlier in the year. In this environment, our focus is on what we can control, running a reliable operation, taking care of our people and customers, and protecting our margins and cash flow.

As part of that, we are meaningfully reducing capacity in the current quarter with a downward bias until we see the fuel situation improve. At the same time, we're moving quickly to recapture higher fuel prices. With much of the industry still struggling to earn its cost of capital, there's a high sense of urgency to address higher fuel and reduce unprofitable flying.

Over my career, I've seen many periods of disruption in this industry. And time and again, high fuel prices have been the most powerful catalyst for change, separating the winners and forcing weaker players to rationalize, consolidate or be eliminated. Delta is navigating from an advantaged position. We have the best-in-class brand with a loyal, resilient and financially healthy customer base. Our financial foundation transcends the industry, built on double-digit returns, durable cash flow and an investment-grade balance sheet. And we own a refinery that provides a partial offset to elevated refining margins.

Based on current demand trends, we expect low-teens revenue growth in the June quarter, recapturing 40% to 50% of the more than $2 billion of fuel headwind in the quarter. With that, we expect to deliver 6% to 8% operating margin with a pretax profit of $1 billion. Dan will talk more about the components of our outlook.

And while it's still early to update the full year outlook, our structural advantages and execution keep us on track to achieve our long-term financial targets. So while higher fuel is a current impact to earnings, I'm confident this environment ultimately reinforces Delta's leadership and accelerates our long-term earnings power. '26 will be another opportunity to demonstrate how much we have structurally improved our business and reduced earnings volatility relative to prior cycles and to the industry.

That also shows up in how we operate and serve our customers. We've long been recognized as the industry leader in reliability. In this quarter, Cirium named Delta The Most On-Time Airline in North America, for the fifth consecutive year. That reflects the strength of our operation and the pride that our teams take in delivering for customers.

At the same time, over the past several months, particularly following severe weather, our reliability and recovery haven't met consistently enough our high standards. We understand the drivers, and this has our full attention. Teams are taking targeted actions to improve resilience and recovery as well as addressing challenges that have resulted from contractual changes to our pilot working agreement that came into effect over the past year. While this will take a little bit of time to work through, we're partnering with our pilots and union leadership to ensure we deliver the reliability that Delta is known for.

Reliability and experience go hand in hand, and we're continuing to invest for our customers. During the quarter, we placed firm orders for 95 additional aircraft, accelerating our fleet renewal and supporting international growth in the years ahead. We also expanded our industry-leading lounge network, opening a new Sky Club in Denver and completing 3 newly renovated clubs here in Atlanta.

And as we invest in the physical experience on the ground and in the air, we're also continuing to set the standard for the digital travel experience. Fast free WiFi is already available to members on our 1,200 aircraft, enabling more personalized seatback and in-flight entertainment than any carrier in the sky. Last week, we took another strong step forward by announcing a game-changing partnership with Amazon Leo, to bring the next generation of satellite connectivity to our aircraft.

Enhanced capabilities and our growing partnerships create meaningful opportunities as we continue to build Delta Sync into a powerful platform for onboard digital engagement. This year, we expect to cross 110 million customer log-ins, reflecting strong adoption and growing engagement. With partners like the New York Times joining YouTube Premium, Paramount+, American Express and T-Mobile, Delta Sync is delivering differentiated experiences that deepen customer engagement and strengthen our brand, and much more to come.

So in closing, the March quarter reinforces the strength and durability of the Delta model and our investment thesis: strong demand, disciplined execution and the benefits of the strategic choices that we've made to build a more resilient business. Most importantly, we have the best people in the industry, and that advantage cannot be replicated.

With that, I'll turn it over to Joe to walk through revenue.

Thank you, Ed. I want to start by thanking the Delta people. In a quarter with strong demand and a dynamic backdrop, our people delivered for our customers. As I step into the Chief Commercial Officer role, our focus is accelerating the integrated strategy that has consistently delivered a sustained unit revenue premium.

Commercially, we're building on our strength, leveraging a leading global network, scaling best-in-class domestic hubs and growing our international reach. For customers, we are continuing to invest across the travel journey and expanding choice, enabled by better retailing and technology that improves how we sell and serve. Customers are responding by flying us more often and spending more within our loyalty ecosystem, deepening their engagement with Delta. And through continued fleet renewal, we are driving incremental margin improvement with more premium seating, lower unit costs and improved fuel efficiency.

March quarter results demonstrate the power of this model. Total revenue of $14.2 billion was a first quarter record and 9.4% higher than last year, several points above our initial outlook. Total unit revenue grew by 8.2%, with a nearly 2-point contribution from MRO. [ Passenger ] unit revenue growth was healthy across the board with sequential improvement from the fourth quarter in all regions. Domestic and international unit revenue grew mid-single digits and improved through the quarter, with strong performance in both premium and main cabin.

Importantly, we saw an inflection in main cabin with the first full quarter of positive unit revenue growth since the end of 2024.

Diverse revenue streams represented 62% of total revenue in the quarter, with premium and loyalty growing mid-teens. Remuneration from American Express grew 10% to over $2 billion, led by 12% spend growth on strong acquisitions. Corporate sales grew double digits and set a quarterly record. Performance improved throughout the quarter with positive growth across all sectors.

Turning to our June quarter outlook, we are reducing capacity and taking steps to recapture higher fuel. Our strong brand preference, premium product focus and actions on capacity position us well to do so. While historically, fuel recapture has lagged 60 to 90 days, we are seeing a quicker response with real-time traction in the industry given the pace and magnitude of the move up in fuel.

Corporate and consumer demand continues to be strong even as we pass through higher fuel. Cash sales grew mid-teens in March, with momentum extending into April across the booking curve and in both premium and main cabin. With these dynamics, we expect second quarter total revenue growth of low-teens on flat capacity growth, reflecting double-digit passenger unit revenue growth. This is a meaningful acceleration from mid-single-digit unit revenue growth in the March quarter. As with any environment, we will remain nimble, prioritizing margins and return over both the near and long term.

In closing, the March quarter demonstrates our commercial advantages, and we are focused on investing to extend our leadership over time. With that, I'll turn it over to Dan to go through the financials.

Thank you, Joe, and good morning to everyone. I also want to recognize and thank our people. This quarter demanded a lot from our teams across the operations. They responded with commitment, teamwork and an unwavering focus on our customers.

In the first quarter, we delivered record March quarter revenue with an operating margin of 4.6% and earnings per share of $0.64, within our initial guidance range. Fuel prices averaged $2.62 per gallon, including a $0.06 benefit from our refinery. This was nearly $0.40 higher than we expected at the start of the quarter, driven by the sharp run-up in March. Nonfuel unit costs grew 6% over prior year, reflecting lower capacity growth than planned and higher recovery costs.

On cash, we generated $2.4 billion of operating cash flow, after $1.3 billion profit-sharing payment for our people. After reinvestment of $1.2 billion, we delivered $1.2 billion of free cash flow for the quarter.

Strong cash generation enables further balance sheet progress. We ended the quarter with adjusted net debt of $13.5 billion, down 20% from last year, and gross leverage of 2.4x.

Now turning to the June quarter outlook. Our outlook is based on a fuel assumption using the forward curve as of April 2, resulting in an average price of approximately $4.30 per gallon, approximately double the price we were paying last year. This includes an estimated $300 million benefit from our refinery. Relative to the start of the year, this fuel price adds more than $2 billion of additional fuel expense in the quarter.

With these fuel assumptions, the actions we are taking and continued strength in demand and we expect total revenue to grow in the low teens on flat capacity to prior year. With this, nonfuel unit costs are expected to grow similar to the rate in first quarter, reflecting the impact of our capacity reductions and the continuation of higher crew-related costs.

As Ed discussed, improving operational resilience is a top focus, and we are confident in delivering improvement in both operational and cost performance in the second half of the year. Based on those components, we expect a second quarter operating margin of 6% to 8%, with earnings per share of $1 to $1.50.

With structural advantages and the actions we are taking, we are best positioned to navigate this evolving environment. The strength of the brand, the resilience of our customers and a more diversified revenue base provide greater financial durability.

Our balance sheet is the best in our history. We are investment grade at all 3 credit rating agencies, have reduced our adjusted net debt below 2019 levels, and we have a well-laddered maturity profile supported by a substantial base of unencumbered assets and secured borrowing capacity.

Our vertically integrated fuel strategy is a unique differentiator. The refinery directly supplies a portion of our jet fuel needs and its economics partially offset higher [ cracks ], reducing the all-in price we pay for jet fuel.

Before we move to Q&A, I want to highlight the performance of our third-party maintenance, repair and overhaul business. As we discussed in January, with increased financial disclosure in MRO, breaking out both revenue and costs in the P&L. The MRO revenue in the first quarter more than doubled over the prior year to $380 million on execution by the Delta Tech Ops team. For the remaining quarters of the year, we expect a healthy but more normalized rate of MRO growth, supporting a full year revenue output -- outlook of $1.2 billion, representing nearly a 50% improvement over last year, with expanding margins.

In closing, Delta's financial strength transcends the industry and positions us to extend our leadership through times of volatility, reinforcing our advantages and improving the long-term earnings power of the business.

Now with that, I hand it back to Julie for Q&A.

Thank you, Dan. Matthew, can you please remind the analysts how to enter the question queue?

[Operator Instructions] Your first question is coming from Savi Syth from Raymond James.

Maybe the industry, as you pointed out, has been quick here to raise fares and bag fees. I was curious if the mid-teens revenue outlook reflects what you're seeing on the books today or if you have an assumption that some of those fares and fees will drive acceleration in the back half of the quarter?

Well, Savi, are you on speakerphone? We barely could hear what you were saying. It came across mumbled.

Yes. Let me try this, Ed. Sorry about that. Yes. So related to kind of the -- kind of this quick action on fees and bag fees here, I was curious if the mid-teens revenue outlook reflects what you're seeing in the book today or if that includes an assumption that some of those fare increases and fees will drive kind of acceleration in the back half of the quarter.

While we are -- what we are seeing over the current term, clearly, we assumed in that analysis that oil prices were going to stay very high through the quarter, consistent with our fuel assumption, and so there would be more growth anticipated in terms of improved RASM going forward throughout the quarter.

Makes sense. And maybe just a follow-up on that. You showed kind of really strong RASM across the 4 entities in 1Q. I was curious what the general expectations are in 2Q, and if there was any differences in demand strength or ability to pass through higher costs across those entities?

Savi, this is Joe. No, we see actually really good demand right now across all entities, going into peak summer for Transatlantic, and that looks very good right now, Transatlantic was a bright spot for the first quarter. So now, across all the booking curves and across all the booking periods, we're seeing strong demand.

Your next question is coming from Conor Cunningham from Melius Research.

Just again, I totally appreciate you're not speaking to the 2026 earnings at this point. But only like maybe play back last year, it was a much different circumstance when you did full guidance. So I was hoping you could just level-set a little bit to how you view the year. Clearly, demand is where you think it is. Is it just like where jet fuel settles to see where you can start to potentially get back to growing earnings again this year?

Conor, yes, exactly. We woke up this morning with a very different set of fuel assumptions than we had before we went to bed. And in this environment with this level of volatility, which we don't expect the volatility to stay at this pace day by day as this conflict progresses one way or the other, and so until we have a better sense for where structurally we see oil landing, which we do believe will be higher for longer, not to say at the levels we modeled, we'll be in a better opportunity to guide, which I think is a little different than the situation where we were a year ago where that was more revenue based, and that was a much more difficult wildcard.

Fair. Okay. Just on the long-term EPS, your confidence there, I mean, I tend to agree with you. I think that obviously, there's a clear foundation for strong earnings quality going forward. In the past, you've seen oil spike, fares follow, and then oil kind of normalize and then fares kind of follow that. But it seems like it's a bit different as we start to look towards '27. So if you could just walk through the puts and takes of how you see the industry kind of playing out. What do you see for Delta to continue to take share and drive margins and durability in cash flows?

Well, I think I mentioned it in my prepared remarks, you have a considerable portion of the industry that has not returned its cost of capital, has not made a profit in years. And going back over the last decade, when we saw consolidation happen, we forget what drove consolidation. What drove consolidation was higher fuel prices back in 2009, '10, '11, and we were the leaders in that with the acquisition of Northwest in 2008. So I anticipate higher fuel prices will cause much more significant structural reform than we've seen over this period.

COVID, I think, was a different animal where every -- no one was strong enough to engage in the type of rationalization that was necessary. And as we look forward to building a healthier business for the future, there's a number of business models that their owners are going to start questioning whether they continue to commit capital to. And however that plays out, it's going to be a benefit to Delta.

Your next question is coming from Tom Fitzgerald from TD Cowen.

Really encouraging set of results. Just kind of curious if there's any kind of places where you've seen other geographies or customer segments or parts of the cabin where you've seen more demand elasticity, or so far, so good and pretty much just [ broad band and ] no pushback against higher fares?

Tom, this is Joe. Across our network, we've got a very strong bookings right now for the second quarter and summer. So in a broad view, we've seen very strong demand and especially still in the premium and corporate space.

A couple of places that we've talked about before is point-of-sale Europe has been a little bit weaker. We've seen a little bit of weakness in Mexico leisure. Just with the incidents that occurred in point of origin, we've taken capacity actions there. So a couple of hotspots around our network, but overall, very broad and -- broad strength in what we're seeing.

Okay. That's really helpful. And then just maybe sticking with international over the long term here, how you're thinking about international margins and then just maybe the mix shift within international in terms of premium versus main?

Yes. As we -- on our journey, as we expand our international footprint, we're really pleased with the results and what it does for our total network to ensure we're in the right economies around the world. Our premium demand comes from how we're redoing the interiors of our airplanes with seating, with our D1 seats, our DPS. If you look at the aircraft we're taking, closer to 50% of that cabin now is premium seating. And what we're retiring is aircraft that are 30% premium.

And we're actually able to carry a lot more cargo. If you look at our cargo numbers, this quarter, we were up 8%. And that continues to grow and a lot from Asia as we've invested in the product. So as we invest in the product, fuel-efficient airplanes, the strength of our domestic network, that feeds international. And more importantly, the hubs that we use around the world with our partners really gives us that insulation and our strength.

Your next question is coming from Mike Linenberg from Deutsche Bank.

Good results, nice to see in a difficult environment. Joe, your predecessor had floated the idea of segmentation in the premium cabin. It looks like one of your competitors is going down that path. Where are you with respect to that? What are some of the gating issues in launching that?

Mike, we're -- as we talked about this over the past couple of years, of further segmentation, we're well on our journey, and we're on target for where we want to be by the end of the year with the premium segmentation. So for us, we're full speed ahead on that, and we like what we see so far in the segmentation. So you can expect more for us in the next couple of quarters.

Great. And then second question, just maybe to Dan, this probably falls under your role, notwithstanding the Strait of Hormuz maybe now open, we had been hearing about jet fuel shortages in parts of the world, Asia Pacific, maybe Australia, down to 25, 30 days. Do you have any issues with sourcing jet fuel? Any issues on the horizon, anything that you're hearing?

Yes, Mike, thank you. No, we have no issues today, and we don't see any over the next 30 days or so.

Your next question is coming from John Godyn from Citigroup.

I was hoping to just maybe explore the conversation around capacity reduction a bit more. Is there anything you guys can just help us with kind of putting some bookends or some dimensions around back-half capacity growth, what the pivot points are? Are you guys managing to EPS neutrality or other metrics? Just help us think through that and what the puts and takes might be.

John, this is Ed. As you can appreciate, it's a pretty dynamic environment. I'd say with fuel moving around, that's the biggest driver of some of our decision-making. We have good line of sight, and Joe can add color as to what we see happening in the second quarter where the capacity is falling out to take out the growth. But as you -- as we watch the events over the course of the next month or so, and when we set our summer schedule or finalize the summer schedule, there will be opportunities. And I think it will be heavily dependent on what's happening in the economy, what's happening with respect to demand elasticity as people have been asking, as well as where fuel prices are.

Yes. And I think, John, when you see $4 to $5, we're targeting capacity in off-peak times. Off-peak for us, if you think about our unit revenue basis, is 15% to 20% less valuable than peak time flying. So when you think about edge-of-day, red-eye flying, those are all, when you think $4 to $5 of fuel, those markets will be under the most amount of pressure. So what you'll see from us is utilization flying, edge-of-day flying. We've done this over and over again when you have situations like this. So it's a very easy amount of capacity to come in and out, and it's one where you want to be more conservative in an environment like this.

As Ed said, we'll see where the rest of the year goes, but I think we'll probably take a downward bias and continue to look at the summer for opportunities.

And to state the obvious, the best type of fuel recapture is not to purchase the fuel in the first place if it's not going to be profitable. So that's my bias here.

Yes. I would just add, from working closely with the commercial teams over time, they just always have this eye to profitability, margins and returns. And they know where to draw the line and they adjust accordingly.

That makes a lot of sense. I appreciate that color. It's certainly the right tactical playbook. I'm curious if there's a point where it becomes more of a strategic question about the fleet plan, accelerating retirement, getting out of an aircraft type, something like that. Should we be brainstorming the possibility of moves like that? Or are we just far away from that?

We are doing that, and you're right, John, on the margin. We lean more heavily into making some of those decisions maybe a little sooner. But I'd say it's probably a bit early for us to announce a new strategic direction. But that's on the table.

Your next question is coming from Duane Pfennigwerth from Evercore ISI.

I wonder if you could frame a yield improvement you may be seeing in Pacific ex China as long-haul flows avoid connecting through the Middle East for a period of time. Are you seeing a surge or maybe still seeing a surge in close-in premium?

Duane, this is Joe. Asia has been a very, I'd say, very durable for the past several quarters. Japan has been an outlier. China has been strong, in chime with our partner, has been very strong. We have seen demand avoiding the Middle East for connections. I'd say our partners probably see more of that as they go through Europe -- as they connect more through Europe or connect through Asia. But we can see it as well, and the close-in yields and bookings have been very strong on the business and corporate side.

And for my follow-up, just on MRO, hoping you can shed some light on the drivers of the pickup in revenue growth there. Can you just remind us how much of your own engine work your own MRO does? And is the revenue growth acceleration a function of increased capacity investments that you've made over the last couple of years?

Yes. A few items I'll talk about. First quarter was our lowest quarter last year. So we only used the 1 quarter, I guess, it was a low watermark, it was $140 million. So low benchmark. It relates to a strong backlog that the team had built throughout 2025 for not only '26 but '26 and beyond. And it's a balance of what the customers' needs are versus our shop capacity. And those things aligned and allowed the team to execute. The work scopes that we worked on were heavier work scopes and had more content associated with them, and it drove the revenue growth.

That's why you'll see it sometimes be a little bit lumpy. It's not like just clocking in at 20% a quarter type thing. You'll see it move around. So that's why the annual growth rate in working towards a $1.2 billion and about just over 20%, you'll see for the remaining set of the quarters.

Your next question is coming from Jamie Baker from JPMorgan.

One for Joe. So we all know that the traditional discount airline model is impaired, and there are a lot of drivers for that. But one of them is clearly the absence -- I'm sorry, the advent of basic economy. On CNBC this morning, Ed declared corporate is back. So that's the basis of my question. As corporate volumes increase, do you have the capacity to manage that without decreasing basic economy inventory? Or should we assume that corporate recovery for Delta may actually advertently rejuvenate some of those smaller competitors that can't earn their cost of capital? I mean, obviously, it's great news for Delta, I'm just trying to take a bigger picture for the industry.

Jim, yes, when I look at our corporate customers and where they book, I think we have plenty of seats for where in the booking curve those customers want to book in all cabins. So I don't think main cabin -- and basic is flexible depending on the market that we're in, right? Basic is not the same in every market and where we compete. So our inventory teams can change those strategies based on what we see for where the customers are on that yield curve. So I think those are flexible, but we generally always have seats for our closer-in, higher demand consumers.

And as a follow-up on that, any geographies where you think your corporate share maybe, I don't know, a deficit to where it otherwise should be at this point? I mean any meaningful difference between the coasts and the interior, that sort of thing?

I wouldn't say -- I would think on a year-over-year basis, we look at where our RASM grew for the first quarter, our coastals were stronger than our core because that's where corporate last year on the revenue side was more impaired. So we've seen the coastals actually very strong for the first quarter, which we were really pleased to see. Those are the biggest corporate markets. Some of our biggest clients are in the New York, Los Angeles, Boston, Seattle type market. So that's been really good to see on the -- on where that demand came from in the first quarter, kind of showing the resurgence and the durability of corporate.

And to be clear, Jamie, we have gained share over this past year as well -- this past quarter corporately. So we're not -- to echo Joe's point, we're not seeing any signs of weakness at all. If anything, that's been double digit just about every sector we follow.

Your next question is coming from Atul Maheswari from UBS.

Are you able to provide more color on the second quarter revenue expectations or RASM expectations by yield and load factors? And then related to that, any second quarter expectations for various geographies would be helpful.

Yes. I think the yield and load factor as we go to our flat capacity plan for the quarter, you're going to see -- you'll see some load factor improvement, and probably in all cabins. But mostly, it will come from yield. We've got a recovery from last year at this time where we were the hardest hit on revenue from the tariffs and other various events, and still recapture. So those are the biggest pieces of where we see yield versus load factor for the second quarter.

And around the world, we're still seeing strength, I would say, equally around our system. You've seen the -- anything that's really been dragging is Mexico leisure, as we talked about. But we've moved that capacity out very quickly after the events, and that capacity is down for the foreseeable future. And those customers have actually just moved to different entities of leisure destinations, whether it's Caribbean or Florida. So we'll recapture them somewhere else. But no, but I've seen -- I think we'll see the strength across the board.

That's helpful. And as my follow-up, if oil were to move, if the ceasefire goes permanent, oil moves sustainably lower from here and maybe price increases are not fully rolled back, in that scenario, do you think Delta can drive enough back half upside such that it enables you to achieve your previous full year outlook? Or do you think enough damage has already been done with the $2 billion incremental fuel cost this quarter that basically makes achieving the previous full year outlook outside any reasonable realm of possibility?

Atul, this is Ed. We're not in a position given how dramatic the fuel swings have been to really answer that. We do expect, hopefully, that fuel settles down. Now it will settle down, I think, at a higher level than where we have in the plan. So fuel recapture is going to be important no matter what we do. And the degree in which we can retain any of the pricing strength that we talked about from industry rationalization, that will certainly help us boost our margins this year and clearly into next year as well.

Your next question is coming from Andrew Didora from Bank of America.

So the 40% to 50% fuel recapture in 2Q was pretty similar to how we were thinking about it. But I guess what we've debated here is how this trends into back half of the year if we're in a higher for longer fuel environment. We would think this pass-through should continue to accelerate in that scenario. Is that a fair way to think about it? Or can you help us understand how you would think about the fuel recapture as we move into the back half of the year?

Yes, our goal is to recapture all the fuel. Given the level at which we snapped it, it's going to take more than the current quarter. But we would expect if that fuel level stays intact, that we're going to continue to see a much higher percent as we move into summer.

Okay. And then just, I guess, on the -- to touch up on the cost side, I think you've been highlighting some of these pilot recovery issues certainly lingering here into 2Q. I guess how do you fix that? And is there any kind of concern on those costs maybe being higher as we head into peak summer when the operation is a little more tightly wound?

Yes. As we talked about, we don't have the resilience that we're known for related to that. We know what the drivers of that are. As Ed mentioned, it definitely has the full team's attention and focus. We're working on those things. It's a broad set of changes that we've got to go put in place. It will take us a little bit of time here as we work through it through the summer.

And there's no doubt when you're flying more intensive operation, and as you see with weather, some of that will be highlighted more. But we expect to make progress on it as we progress through the summer and through the back half of the year.

Your next question is coming from Catherine O'Brien from Goldman Sachs.

I guess just on demand, despite quite a bit of geopolitical and macro uncertainty, demand is just holding in remarkably well even in the face of higher fares to help offset fuel. This just feels really different than what we saw happened last year on macro and geopolitical uncertainty. What do you think is driving that difference?

Catie, this is Ed. I said this publicly over the last number of months, I think the higher-end consumer, the premium consumer is candidly immune or becoming more immune to the headlines and not delaying their investment in the experience economy, waiting to see what the next headline is going to be, on the margin.

I think a year ago at this time, I think people, and not just people, individual, importantly, corporates, were stalled, were a bit frozen by the dramatic nature of the tariff uncertainty. And we hear about tariffs now every day. And sometimes they go up, sometimes they go down. But it's not affecting individuals' lives in a meaningful way. And I think you -- as difficult as it is to see what's going on with the conflict in the Middle East, I'm not sure that our premium customers are feeling affected by that.

Okay. So maybe volatilities are a new normal. Got you. Maybe I realize that it's really tough to call what's going to happen in the back half of the year and totally understand that. But maybe just taking the $1.2 billion of free cash flow you produced in the first quarter, and I'm not sure what the free cash flow outlook is underlying your 2Q, but I'm sure you've got something penciled in there, how is first half free cash flow tracking versus your original $3 billion to $4 billion full year target?

It's on track through the first quarter. The second quarter will be impacted from where we expect the quarter is versus our current guide. But that -- you would expect that with the loss in earnings.

Your next questions come from Michael Goldie from BMO Capital.

Your release noted that you're seeing particular strength in corporate demand for premium products. Is this a general market trend? Or are there specific Delta initiatives such as merchandising and working with your corporate clients to improve that premium uptake?

Mike, this is Joe. Well as you know, overall, the economy is strong. And so corporate customers were moving and it's been -- first quarter had been a step-up from what we saw exiting last year. And so customers are back on the road. Remember, last year at this time, we really had a very slow corporate growth as we got into the March and April time period.

So it's a great, year-over-year, it's a good confidence in the business, and everything that we hear from our clients is that they're going to continue to travel and travel even more than they did last year. So I think those are good. Most of those do -- are in premium type cabins and merchandising. They're not in the basic products that we have, but -- so they're more in our full fare or for premium products. And that's been like, as I said, all of our -- all of the areas of corporate are up double -- or almost all up double digits.

And then as my follow-up, the strength that you're seeing in demand, can you help us understand as we look forward, like how much of that is coming from customers accepting higher fares versus actual momentum on the number of bookings?

Well, I think you've got it on both, right? You've got great momentum in -- we had great momentum in the first quarter that's carrying in. And when you look at the cash sales, that we said were up 10% and actually up 15% for March, that went out both in short-term periods of booking as well as long term that people were working on their travel for summer and Transatlantic and areas like that.

So you've seen it across all areas. And what was really good to see is the close-in build, which is very strong. So the revenue that's on the books is -- also takes into consideration what we've seen in increases just recently.

Your next question is coming from Sheila Kahyaoglu from Jefferies.

Maybe similar to, I think, Jamie asked on the coastal hubs, but post-COVID, you took share. How do you think about higher fuel and how it changes the competitive landscape, but specifically focusing on international, how do you think about market share opportunities where you're investing the most? And maybe my follow-up would be on how we think about price increases internationally and domestic. Were they different? And what are you seeing thus far?

Yes. So on the share side, I think we've -- we look at the past year, we've done very well on not just maintaining but increasing our share across all entities as we continue to expand into the international regions. I think the fare changes on fuel are different for domestic and international, but both have to meet their returns, is what we're really guiding towards. So whether you're in domestic or international, it's different for both of those entities, but the same intent, is to recapture the cost of fuel.

Matthew, we'll now go to our final analyst question.

Certainly. Our final question comes from Chris Stathoulopoulos from Susquehanna.

I want to go back, Ed, to the differentiated and durable theme. I think it was a quarter or 2 ago, you spoke about emphasizing or growing your loyalty presence or ecosystem in your focus cities. And maybe, I guess, if you could talk about how you're thinking about your brand-loyal market share as it relates to your core in coastal hubs. I'm not asking about profitability, I realize the competitor or competitors of yours spend a lot of time debating that. But given where fuel prices are and then contextualizing what you said a quarter or 2 ago about growing the loyalty piece within the focus, how you're thinking about this concept of brand-loyal share as it relates to your core and coastal hubs in this environment?

Chris, this is Joe. I'll take that. We've been very purposeful in how we put our -- where we put our capacity and how we build that brand loyalty in a city. And I think we're very fortunate that we have a very loyal following, and the Delta brand is loved in actually the hubs and the cities that we choose to compete.

So a lot is how much more we can offer our customers and how much more they pay us. And I think that's been, on the loyalty side as well as you think about segmentation, the ground products we've put in, not only the air products, we've been upgrading the fleet in our coastal and our focus cities as well as our core hubs, but the investment we've made in all of our cities is a testament to the -- what we get back in that brand loyalty from our customers.

So we're going to continue on that path. I think that's, in my opening comments, that was one that we're really focused on is how to deliver more of that brand strength in a city, which also gets more loyalty and also allows customers to be able to spend more on Delta.

That will wrap up the analyst portion of our Q&A. And I'll now turn it over to Tim Mapes to open the media portion of the call.

Thank you, Julie. Matthew, if you would, please, as we transition to the members of the media, if we have any, would you please remind people how to access the call queue, please?

[Operator Instructions] Your first question is coming from Leslie Josephs from CNBC.

Wondering if the capacity plans that you have now, or flat capacity rather, is affecting your hiring at all for 2026 and maybe into 2027? And then also United has made -- the executives have made some comments about trying to catch up to Delta in terms of profit and including getting some more customers and more up-for-grab markets like L.A. And just wondering if you could talk about some of the initiatives Delta has in the hopper over the next few months and years that you think will keep your competitive advantage going?

Leslie, you squeezed in like 8 questions in 1 sentence, I'm impressed, No, we have not adjusted our hiring plans. Again, as I said, the situation is fairly fluid. We've largely completed hiring on the frontline side for the summer season anyway. So no changes there.

We love competition. And I think it's good, as I mentioned to you yesterday, that we have other carriers that are replicating our model, and we will continue to do well. We know the Delta brand is the strongest brand in our industry. We know our market share in places where we compete heavily, including, most importantly, the coast, continues to take an outsized share. And we'll continue to keep our investments going strong to keep those customers happy, particularly our premium customers.

[Operator Instructions] Thank you. There are no further media questions.

Great, Matthew. Thank you very much. That will conclude today's call then.

Thanks, everyone, for joining.

Thank you. That concludes today's conference. Thank you, everyone, for your participation today.

Good morning, everybody. My name is Jamie Baker. I cover the U.S. airline equities and aircraft leasing equities at JPMorgan. I'm joined by my dear friend and colleague, Mark Streeter, who does the same thing, except on the credit side. And it's our pleasure to welcome you to the JPMorgan Industrials Conference.

I've said this in the past, but I keep hoping some year to look out at an empty room. Because all is right with the airline world and airlines are generating record levels of cash and achieving high-teens pretax margins. It doesn't look like this will be that year. So we'll keep plugging along.

My only ask of the audience is get engaged, ask good questions to management. Mark and I will obviously keep the Q&A on track if necessary, but we're holding this event for you, not for us. So please don't be shy.

Mark, anything before we introduce Delta?

Just a couple of things, number one, happy St. Patrick's Day. Number two, thank you for making it down to Washington, D.C. For those of you that are here in person, we'll probably be here for another year or 2 years before we move back to New York City. We'll see if we make that decision. But I think what you're going to hear a lot today, check the tape, of course, look at the 8-Ks. You're going to hear a lot of these words that are durable, resilient. That's really going to be the tone for today. We're very impressed with some of the guides this morning. So we look forward to kicking it off, hearing about Delta's resiliency and durableness.

And just to be clear, somebody grabbed me in the hall before and they said, "Why is Delta always first? Why don't you mix it up and let somebody else take the first slot?" And just to be clear, Delta is not always first. We reserve the opening slot for the airline that generates the largest percentage of industry profits and/or pays profit sharing that is in excess of the sum total of the rest of the industry.

So to Scott Kirby, it's Bob Jordan or Robert Isom, this slot is yours for the taking. Ed does not seem to be quaking in his boots. I'm with you on that.

So, before I turn it over to Ed Bastian, just going down the road, we also have Joe Esposito here today, a familiar face, Dan Janki, a somewhat less familiar face at this conference, but certainly not for those of us that know and understand the Delta franchise. We've got Eric Snell at the end and then, of course, Julie Stewart.

And why don't I turn it over to Julie for the prepared remarks, and then we'll turn everything over to Ed.

Thank you, Jamie and Mark, and it's always a privilege to be here in the first spot. As a reminder, today's presentation contains forward-looking statements that represent our expectations about future events. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that may cause those differences are outlined in our SEC filings.

And now I'll turn it over to Ed.

Well, thank you, Julie, and thank you, Mark and Jamie for continuing to reserve the spot for us. I expect we'll be here for a while, I hope certainly to be here and always appreciate that. My only request is that we changed the timing from March, because March has always been for us, at least in our industry, an interesting month, and sure enough, and everything was going great in the first couple of months of the year then war breaks out. So whether it's COVID started in March, the Ukraine War started in March. We had another war started in March. We've got tariffs starting in March and maybe next year. Okay. Well, we're just putting in our plug. That's all I can say. But it is really great to be here. It's good to see a full room, and thank you all for your interest in Delta.

So Julie, you said all that? Wow, that's fast.

I'd like to start before we get into the quarter itself, just giving an update on how we see Delta positioned and why we believe that Delta continues to be a very compelling investment decision. And when you think about the times we've been through differentiation and durability are important, as Mark said, and we've shown the ability to generate meaningful margins, meaningful cash flow, flow through volatile times. It looks like we'll get another chance to demonstrate that again in 2026. We'll talk about how we're doing as we think about that.

But importantly, we also see meaningful opportunity to continue to grow our margins, to expand our cash returns, and to leverage that strong balance sheet that we've had to increasingly use flexibility, both investing on offense and continuing to be shareholder-friendly with our returns.

For several years, we've talked about our themes, differentiated and durable. And for us, at Delta that starts with our people. Our people are the best in the industry. They are just about the only thing that can't be replicated in this industry. It is the quality of care and service that you receive every time you step foot on Delta Property and Delta Airplane. It is the thing that we talked about Delta difference.

And that Delta difference continued yet again to deliver a very strong 2025, double-digit margins, record $4.5 billion in free cash flow, real free cash flow, not marked up free cash flow, and the opportunity to show the brand at its best when times are tough. And our team really, really did a great job.

The focus that we've had on the return of ROIC and free cash flow, we think, is a differentiator. When we set out and look at the industry, and I'll talk about that in a second. We've got a goal at Delta to generate 15% ROIC. Our number this past year was 12%, but as I said earlier, we have to see meaningful opportunity to continue to improve those returns.

And the free cash flow, not only did we generate $4.5 billion of free cash flow in '25, we generated over $10 billion free cash flow over the last 3 years, which is some will remember, that was a marker that we put down 3 years ago when we made our investment plans and thesis.

And we believe we're positioned to win in any environment. The current environment has some elements to it, not just the fact that we went through or going through the impact of high fuel prices, jet fuel, for those unaware, has almost doubled since the start of the year. So it's not just the crude price, the cracks are also significantly higher than they were.

And we had some pretty tough winter weather over the course of this past quarter. So in that vein, being able to, as many of you know, reaffirm our guidance range for the first quarter of $0.50 to $0.90 of EPS covering that loss of capacity, almost 2 points of capacity due to winter weather and a $400 million fuel spike just in the month of March tells you that we're making good progress.

It's really tough to read the financial slide when it's on the other side of the room. But anyway, I'll do my best.

The story for us in this quarter is about revenue demand and the health of the demand set. We are increasing our guidance for the current quarter on revenues. We're seeing several points of demand growth above and beyond the 5% to 7% that we forecasted at the beginning of the quarter. Sales for us have been very, very strong all quarter long, most particularly starting off in the March spring season, which is typically the season when travel bookings really start to accumulate.

We've had 8 of the 10 highest sales days in our history this quarter. 5 of those, just this month since the war started. And over the last week, our sales are up 25% on a year-over-year basis. So healthy demand. It's across all segments, covering corporate, covering international, covering premium leisure, covering main cabin, covering our domestic system. We're seeing strength in every market that we look at.

We do see a very modest decline in exit Europe since the war started. But that's been -- it's not a strong part of our business, less than 20% of our point of sale on transatlantic is exit Europe. And that's been a decline that we've seen for the last several years. So -- and to be expected when you got a war in your backyard, people tend to stay home. But that -- despite that, we're seeing significant growth on the bookings front.

On the fuel side, we have jet fuel up almost double digits, and we feel like we're well positioned to be able to recapture and do our best to recapturing that fuel spike.

First off, the health of our brand, our premium brand is important, gives us a position of strength in which to price for the higher fuel. When you look at our industry, we've shown over the last number of years an ability to cover and recapture fuel increases generally on kind of a 2- to 3-month lagging basis by the time you get the price increase. We've seen pricing increase twice in the industry, just in last 2 weeks. So it shows you that the industry also understands the importance and there's a sense of urgency about covering this higher fuel.

When you think about a fair bit of the industry, the carriers that don't have a stronger brand presence and a brand premium and the fact that they have not returned their cost of capital in many years, and many of them haven't even made a profit in the post-COVID era, they have no choice, but to alter business plans real-time to be able to cover that fuel.

And all those moves, in my opinion, is just going to make the carriers that are the strong -- even stronger in terms of our ability to continue to grow and continue to expand.

We do have a refinery, as some of you know as well. So we are hedged. This will be the -- as mentioned at dinner last night, this will be the first time with a pretty sudden fuel shock, that we, as an industry, will go through it with no one with fuel hedges, which will be, I think, also adding to the need for people to move with a sense of pace.

But for Delta, the fact that we refine our own fuel up at Monroe gives us a meaningful hedge on the crack. It's not going to cover the crack entirely, but gives us a fairly significant hedge. Not necessarily, you're not going to see it in this quarter because it's a little too soon. But starting in the second quarter, I think you'll see the Monroe profits start to generate that.

Resilience remains our key focus. The winter was tough. We lost -- you just saw yesterday. I'm impressed everybody made it in. We've lost over the course of this quarter, almost 2 points of capacity from plan due to the winter storms. And whether it's the cold snap and the snow that we saw in the Southeast in January or just the storms that continue to roll around here, and they tend to hit us hard on the weekends. It's been pretty tough. So the fact that we can grow our top line close to double digits, and despite the fact we lost 2 points of capacity shows you our RASM and our TRASM numbers are going to come in, in a very, very strong manner.

On the non-fuel side -- I talked about fuel a lot. Non-fuel side, we still are facing some challenges with our overall ability to respond quicker to snapbacks. We are working on that issue, particularly with our pilots. We had some changes that went into effect in our pilot contract over the last year that we're still adjusting and working together with not just our team, but with the union to make certain that we can respond in a fashion which our customers expect. The combination of that, the lost capacity is probably going to add 2 to 3 points to the non-fuel CASM for the quarter.

So in total, revenue is strong, up several points. Fuel is high, higher and our non-fuel costs are growing, all of which still puts us in the envelope in terms of still generating the type of profitability that we're expecting at the start of the quarter.

I've talked about free cash flow, and it's one of our differentiators. When you look at our main competitors, they did not generate any free cash according to how Delta calculates its free cash for the quarter. How we do, it is very simple. We take our operating cash flow and subtract gross CapEx, and we've always done that for years. And that's our definition of free cash flow.

There are a number of carriers that use sale leasebacks and use the proceeds from the sale leasebacks to reduce their CapEx and accelerate cash flow, not realizing the fact they're going to have to pay those proceeds back over time, and it's really another form of financing. We'd like to neutralize for that. So we take -- taking that out and utilizing the Delta differentiation, there's no one in the industry that generate free cash flow, but Delta in the past year.

And you can also see the return on capital that would generate the 12% over the past 12 months compared to mid-single digits for the industry as a whole. Our cost of capital is in the 7% to 8% range. So continuing to generate 5 points healthy return over our cost base and looking to grow there as well.

This is a chart that we showed a couple of years ago at this conference, and I thought I'd update it again when you're showing the durability and the differentiation that Delta continues to generate in a tough year, which was 2025, generating 55% of the overall industry's profits despite the fact that we only represent 20% of the market share, shows how customers feel about the product.

The premium revenues that we are generating continues to grow from 10 years ago, where we were they more than double those premium offerings, really important in times of volatility that you have a product that you can price for a product that's resilient through these tougher times and that our consumer base particularly when you see the Amex remuneration growing from $2 billion to fourfold increase to '25 to $8 billion, tells you also have the best-in-class consumers that are operating on your network and the contribution that's being generated.

This is probably the easiest picture that you can see in terms of the change that we've had over the last decade, that's generating the ability to manage through these tough times and when times are good, and we've seen them too in this industry, continue to expand our lead.

And finally, a chart that I spend a lot of my time continuing to stay very focused on is our debt, getting our debt pay down. You see in '25, we ended with 2.4x. That's gross leverage, not net leverage. Net leverage is 0.5 point better than that on turns, $1.9 billion. We ended 2025 with overall net leverage of $14 billion adjusted net debt. I think that's the first time. That's the lowest we've had since 2019 and continue to pay that down, and that continues to be our top financial priority.

That said, as we continue to come down that curve, we're expecting it to take another chunk out of that in '26 and then continue on down, gives us enhanced financial flexibility, whether it's to play offense on -- whether it's needing to invest back in the business, which we continue to stay very strong. We've had a very simple thesis for the last decade. Half of our operating cash flow goes back into the business and CapEx and half goes to pay down debt and return to shareholders. And that return to shareholders, which I know is on a number of our shareholders' minds, will increasingly provide us more flexibility and enhance the shareholder return capabilities over these next couple of years.

So that's the Delta story. I'm thrilled to have our team here with me just to spend a couple of minutes before we go to Q&A. Joe Esposito is our Chief Commercial Officer. Pleased to have Joe in that role. Joe was side-by-side with Glen for the last 20 years. So he's a 30-year Delta veteran. I've known Joe basically since day 1 that I joined the company almost 38 years ago myself. He is probably -- those of you who know Glen Hauenstein, you know how competitive he is, Joe is even more competitive than Glen.

He knows where all the levers are in the business. He's the one that's built the network for the company. We were talking about moats last evening. He's the one that's created the moats in terms of building up the strength, whether it's on the coastal hubs, whether it's in the Heartland, our international growth strategy. He has been not just in the tactics step-by-step, understanding every single plane in every single flight in every single market that we have in great detail, but also strategically, looking where we're going over the next decade. And great to have Joe in that role already.

I told the team last night, 25% growth in sales in your first month, officially in the job, that's pretty good job. So keep it up.

Dan Janki. Many of you know as our CFO, is going to be moving to be our Chief Operating Officer. Thrilled to see him in that role. It's when I hired Dan 5 years ago, this is exactly the role I had in mind for Dan, and we actually talked about it 5 years ago, and he got a great chance over the last 5 years to really understand the business. At Delta, we have not had a single Chief Operating Officer in -- really since post-COVID when Gil West retired. We've had the operations for different reasons and mostly due to personnel in a couple of different hands.

Dan will have the consolidated operations reporting to him. It will create great alignment. It will create greater speed, great efficiency. And he knows what he has to do coming out of the CFO chair in terms of continuing not just to generate a highly reliable product with excellent service, but a great financial return for our owners as well.

And finally, Eric Snell will be our new CFO starting next month. Eric is no stranger. He's been here for 20 years. Started in the finance organization and but spent most of his time in the operations, and he's had more jobs than I can count on his very quick ascent through the organization. The most recent role is Head of Customer Experience. So all the airport operations, flight attendants, reservations, customer service, all reported to Eric. So, and which is, by the way, more than half of the total employees in the company. So he's bringing great operational depth into the CFO chair.

And as I told, told folks last night, it's not like we're losing a CFO, we still have our CFO and Head of Customer Experience are just changing hats here. And I'm thrilled with both their ascension and the opportunities that we have here.

So with that, I'm going to conclude, and we'll move to Q&A. We're getting through this another challenging time. Who knows what the duration of the events that we see unfolding in the Middle East are. But however they unfold, the one thing I can guarantee you is Delta will be stronger as a result of that.

Back to you, Jamie and Mark.

Questions from the audience? Don't be shy. I challenged you. Ask questions. But in the meantime, we did joke last night that you're the moat builder, which, for some reason, strikes me is like a character from Game of Thrones or something like that. As we think about the moats around the business, over the next 10 years, is the goal to dig them deeper for lack of a better term? Or do you see opportunities to, I don't know if you erect a moat, probably not, create new moats around the business. How should we be thinking about the moat topic?

Well, let me start and I'll turn it to Joe. Joe can handle it from the network perspective, which I think is part of the question. When we think of our moats, obviously, our network strategy and our geographies are really important components to the moat. But the most important moat we have is our people. And the quality of that relationship, the strength of that relationship, that's what I spend all of my time, almost every day thinking about how we can better serve and how we better support people, the people at Delta Airlines. That's the most important moat. That's our #1 competitive advantage.

And the resilience that creates, the operational excellence that creates, the loyalty that creates from customers, that's what enables American Express to pay us this year, which will be $9 billion. It all starts with that level of service. You couple that with then what Joe has done over time, which is building some very strong geographies and very strong coverage tells you that we're going to continue that strategy on both flanks. Joe?

Yes. Good morning, everybody. Yes. No, I think the moats are not only deeper but more. And when you think about -- I spent most of my career doing it in network planning and where we fly. But in the broadened role, when you think about what we have moats and how we treat our customers, Amex relationship, SkyMiles program, the lounge program we built, really bringing that ecosystem together to make -- now just not the network moat, but how does everything else support the network that we're doing.

And I think in the network side, when you go into a stressed environment, that's where you want to be able to compete and look at where we are broadly and go is everything in the right place as you go into a stressed and competitive environment, and that's really what I think we're always most proud of and what we're looking for. Because you're not -- you're building it for the good times, but you're really building all these for durability for the long term. And I think that's really what you always have to keep our eye on is that development. And so it's deeper and it's -- and what's the next moat we want to build around to be even more durable.

And just a quick question on the guide, MRO upside. I guess I don't understand the drivers of the MRO business as well as I should, because I would have thought the business for the first quarter was largely locked in and contracted, but the upside implies that there's more variability in the MRO than what I would have expected. How do we -- how should we better -- how should I better understand the drivers of the MRO since apparently, there's intra-quarter variability?

As you know, we've talked about MRO for many years, getting in a position where we could accelerate growth. We had to invest first in Delta and stand up its capabilities coming out of the pandemic. And as we talked about going through last year, we were excited about the momentum we are creating.

We won midyear, the largest contract in the history of Delta with UPS, and we have the largest backlog. And we're going to continue to grow that backlog, and we're excited to have Mark a new commercial leader for us that's building out that capability. So then it really comes down to how can you execute on that backlog.

And first quarter was our lowest comp for the quarter for last year, but we were just seeing more engine throughput with more scope coming out shops. And it's really on this side, not about always how you induct, but it's how you output, get through test and what your customers need. Remember, our customer base is broad based. It's just not -- it's really the OEMs. It's the military, all those types of -- so we're just outputting more.

And I think for the year, we had originally put out a marker that we thought it would be about $1 billion. We eclipsed that this year for the first time, which we're excited about. I think you're going to see us push between $1 billion to $1.2 billion. So what you're seeing in the first quarter will build into total year upside.

Ed, maybe you can talk a little bit about how the events of the last couple of weeks and however long they last, obviously, having an impact this year on the industry. But when you look forward, the impact that maybe it has on next year. For example, do you make more or less money next year, because of what's going on right now? You obviously have a section of the industry that is infirmed to say the least. And obviously, they can't handle what's going on as well as you can. So what does that mean looking forward?

Well, I think that's the opportunity. It's always been the opportunity in this industry. It's not that something unusual or difficult happens is how you respond to it, that is the market, and that's why Delta is in the lead. I think we've responded well to times of turbulence going back 20 years ago coming through a restructuring and a bankruptcy to being the #1 airline globally in terms of overall profits and cash returns and employee sentiment.

I do think duration is a big question on all our minds, and it's way too early for anyone to speculate. But I think this will certainly change business plans particularly the lower and the more closer you are to having difficulty recovering and being impacted by that spike. When you double your #1 or #2 cost item in your P&L almost overnight, as significant impact because there's those that don't have any margin to absorb that.

The industry has already been pretty modest in terms of ability to grow and focused on returns. And those at the higher end, the premium end, it's going to, I think, shift -- continue to shift people to being with a more resilient carrier, both whether it's for brand strength, whether it's our ability to price when they -- it's appropriate for to recover your cost.

I do think the -- looking forward, assuming that oil prices do return back to a baseline. And the industry has gone through another period of dislocation and disruption that's made it tighter and smaller and more durable, will yield a better return in the longer term. And not what we wish for, but I think that's going to be -- and by the way, you see that happening, and you've seen that happening over time.

You've got -- there's people are voting for you guys upfront.

Joe, how would you contrast the fuel recovery between domestic and international markets, international markets or not all of them, but many of them in your case, benefiting from fuel surcharge mechanisms that are already in place. Domestically, the power is more in your hands to recapture higher fuel. Are they moving up by similar magnitudes?

Second to that, is there any evidence that consumers being cognizant of the reality of higher fuel are pulling their purchase decisions for -- I mean, March is the month that you should be booking transatlantic travel anyway. So I don't know how you would parse that out. But any changes in consumer behavior that you think is reflective of the fuel phenomenon?

Sure. Thanks, Jamie. I see the industry has so far done a good job of moving at good speed on fuel. And I think it's imperative that we do, and it's something that we've got to cover, right, to maintain our margins. So we haven't had to do this in quite a while, but the speed in which you've seen in just the past 2 to 3 weeks has, I think, put a lot of credibility that the industry wants to make money. And so the rates of domestic international are different. Internationally, we can do fuel surcharges and those have gone in historically in the past couple of weeks.

We've -- you've seen fuel surcharge is going and you've also seen the base fares for domestic go up. So I think those are moving at really good paces right now. And there's an imperative for quite a bit of the industry to make money. And so there is a lot of it is on the edge of a breakeven to losing money. So it's really imperative that those get passed through.

I think on the pull forward, I don't know if we see so much pull forward as we lost last year of bookings. If you think last March was -- it's typically one of our best months of the year. And this -- and last March was probably the worst month we could have had spring break, booking for transatlantic, and we saw all of that stall right around this time last year. So I think it's just people have lost that trip last year and -- but we see incredibly strong demand right now. And it's not just -- and you see it in the short term for the 0 to 7 when you think about business and the long term for both premium leisure and premium business. So we're seeing good strength all the way out to the summer, and this is the month that transatlantic will book for the summer.

So this is really where we kind of started to miss that last summer and missed that window. And like I said, 80% of our traffic to Europe is point-of-sale U.S. and that's been growing with a really strong fares. So that's what we think about changing the Europe landscape.

And last year, we talked about July and August was weak. We're not really set up for a lot of capacity this summer. We've been building it in a little bit of a different way for the business traveler as we've seen that seasonality to come off the summer and really go more into the shoulders, which is great for efficiency for us and really what we want to see. So I think that's kind of a continued evolution of the transatlantic bookings.

The other thing, Jamie, is I know everyone is obsessed with what's going on in the Middle East, understandably so with fuel prices and what the effects will be. Our economy still is very strong. We were looking at estimates of GDP growing as much as 4% or 5%. And the underlying health of the economy is still there, particularly the high-end economy, the K that we talk about, and we serve the top end of that K and probably the highest end of that K. That's a group that wants to continue to invest and is candidly a bit immune to what goes on with geopolitical events, different elements. I mean, we've seen so much happen over the course of the last decade.

People are not sitting home waiting and wondering what's going to happen, which is very different phenomenon. So when you talk about how consumers are behaving, I think they're behaving rationally. And it's a new behavior, that says they're going to use their buying power to continue to do what they prefer to do and travel and experience continues to be at top of their discretionary list.

And on corporate, we had a breakfast with Southwest this morning. And one observation that they made was that if they didn't sell a single corporate ticket for the remainder of the month of March, March would still be a post-COVID corporate record for them. I would assume with your highest sales days 8, 9 days out of the month. I mean, I just kind of thought that was an interesting soundbite. Would Delta say the same thing? Or maybe you don't think in those terms.

No, every sector, we track, obviously, two different animals, Delta in Southwest on the corporate business side. But we're the #1 in corporate travel by a large margin in our industry. And we track about 15 different industries. Every single industry we track is up double digits over prior year. Some of that was last year's comp. But more many of these industries and things that you would -- financial services, aerospace and defense, media, technology are up 20-plus percent on a year-over-year basis. So that is very, very healthy growth.

Eric, I don't want to let you off the stage without putting you in the hot seat, shining the spotlight on you. When I think about the various CFOs Delta has had, I think your experience at the company is deeper than in the past. I kind of called you out for this being your first conference. But for those of us that have known Delta, I mean, you've been at the company, what, 20, 20-plus years, the variety of hats you have worn is impressive. How is that going to -- what do you intend to draw upon from those experiences as you take the CFO helm?

Well, thanks, Jamie, and good morning, everyone. Yes, I've been fortunate that Ed has kept me moving around the company for 20 years. So I have touched most departments in our operating team, pre-pandemic and most recently, all of the departments and our customer teams. As you know, we run a very integrated system. It's very complex and integrated. And so, I come with an understanding of what the levers are to really drive performance and efficiency, also have a good perspective on our customer base, what they're looking for as well as our people.

So I think that combination is, will continue to be powerful. And Dan and I have been working together since he's been here on not only customer improvements but efficiency along the way and we'll continue that relationship in the new roles. He's built a world-class finance team. So I'm looking forward to getting back and being a part of that team as we work towards our long-term goals.

Maybe just one more from me, Ed and throw this out to the team. Ed, you mentioned sort of the top of the K, again, the resiliency of your premium customer base. When we look at premium cabin or premium product revenue to total revenue, that's been on an upward sloping trajectory more and more premium revenue. Is there anything going on in the market right now with the events of the last weeks that caused you to rethink that growth of premium going forward and what you were expecting for this year?

I mean, when you have your sales up 25% on a year-over-year basis, I think we're doing the right thing. And no, there's nothing -- there's -- I see no underlying crack or sensitivity that suggests there's going to be an issue. I think the issues that we've seen in our industry have tended to be at the lower end of the market. That's the impact. That's the area of the industry is going to be impacted the most and had to take the most radical change to their business models due to the events of the last few weeks, but it's certainly, I don't think going to be impacting the folks at the top end at all. Higher fuel, yes, but opportunities to recapture, yes.

We'll hold the opening slot for you next year, Ed. Thank you so much.

We'll be here. Thank you, everybody.

Good morning, everyone, and welcome to the Delta Air Lines Fourth Quarter Fiscal Year 2025 Earnings Conference Call. My name is Matthew, and I will be your coordinator. [Operator Instructions] As a reminder, today's call is being recorded. [Operator Instructions] I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations and Corporate Development. Please go ahead.

Thank you, Matthew. Good morning, everyone, and thanks for joining us for our December quarter and full year 2025 earnings call. Joining us from Atlanta today are our CEO, Ed Bastian; our President, Glen Hauenstein; our CFO, Dan Janki, and our Chief Commercial Officer, Joe Esposito. 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 analysts' questions. We ask you please limit yourself to one question and a brief and related follow-up so we can get to as many of you as possible. After the analyst Q&A, we'll 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. You can find a reconciliation of our non-GAAP measures on the Investor Relations page at ir.delta.com. And with that, I'll turn the call over to Ed.

Thank you, Julie, and good morning, everyone. The Delta team delivered a strong close to our Centennial year with results that are a clear proof point of the differentiation and the durability that we built. I'm incredibly proud of our performance. We delivered for our customers and our employees, while also creating value for our owners, all through a challenging environment. .

Operationally, Delta continues to set the standard for reliability and customer experience. We have the #1 Net Promoter Score among major airlines, and Cirium recently recognized our employees for the fifth consecutive year naming Delta in the U.S. industry's most on-time airline. Financially, we continue to extend our industry leadership and delivered on key elements of our long-term framework.

In the December quarter, we achieved record revenue, maintained a double-digit operating margin and delivered earnings that were consistent with our expectations outside of the impact of the government shutdown. For the full year, we recorded record revenue of $58.3 billion, an operating margin of 10%, pretax income of $5 billion and earnings of $5.82 per share. A key highlight is free cash flow. We delivered $4.6 billion at the top end of our long-term financial framework and the highest in Delta's history.

Over the past 3 years, we've generated $10 billion in free cash flow, allowing us to strengthen our investment-grade balance sheet and reduce leverage by more than 50%. Our return on invested capital of 12% is well above our cost of capital, placing us in the upper half of the S&P 500 and leading the industry. These results underscore the strength of our brand and the resilience of our competitive advantages. It would not be possible without the dedication of our people. To all 100,000 members of the Delta team, we thank you for your unwavering commitment. Your care and professionalism, especially through a busy holiday season are the reason customers choose Delta and why our results lead the industry. At Delta, sharing success is at the heart of our culture. That's why in 2025, we awarded a 4% pay increase, and I'm pleased to announce that we will celebrate with our team with $1.3 billion in well-earned profit sharing this February.

This is one of the largest profit-sharing payouts in Delta's history, a testament to the extraordinary efforts of our people that set us apart from the rest of the industry. Turning to our outlook. The year is off to a strong start. Last week, we set a new record for bookings with cash sales up double digits on top of the strength that we saw last year. Top line growth is accelerating on consumer and corporate demand, supporting an outlook for revenue growth of 5% to 7% in the March quarter. The U.S. economy remains on firm footing and consumers continue to prioritize experiences with travel among the top spending categories.

Business travel is showing signs of improvement as corporate confidence grows, with the most recent survey of corporate customers indicating that they expect to grow their travel spend this year. Structural changes are taking hold across the industry as unprofitable flying is rationalized, supporting a healthy balance between supply and demand. And against this backdrop and with continued benefits from Delta's strategic initiatives, we expect to deliver earnings per share growth of 20% year-over-year in 2026, ahead of our long-term target.

Cash generation remains a key differentiator for Delta. And in 2026, we expect to generate free cash of $3 billion to $4 billion, supporting further debt reduction and growth in shareholder returns. Our teams are executing our bold vision of reshaping the end-to-end travel experience and cementing Delta as the world's most loved airline. We're elevating every phase of the customer journey making travel simpler, faster and even more enjoyable. This includes expanding our premium lounge network, delivering a connected experience for SkyMiles members with more than 1,100 aircraft already equipped with faster free WiFi and introducing innovative digital tools like Delta Concierge, our exclusive partnerships with leading brands such as American Express, Uber and YouTube further enhance the experience.

We're leveraging technology and personalization at scale with over 115 million annual logins to our industry-leading Delta Sync platform, creating new opportunities for personalized engagement and partnerships. At the same time, we're streamlining the travel experience with initiatives like Uber Airport Express drop-off at LaGuardia in Atlanta, offering customers curbside hospitality and a direct path to security, saving time and reducing congestion.

The response to our Delta Uber partnership has been tremendous, with over 1.5 million SkyMiles members linking their accounts since launch, demonstrating the power of our loyalty strategy to engage members beyond the flight and drive high-margin diverse revenue streams. Our Delta Amex co-brand card portfolio continues to deliver double-digit spend growth, outpacing the broader consumer credit card industry. Co-brand cardholders are among our most valuable and satisfied customers, traveling more often and spending more on Delta.

Building on our strong domestic foundation and loyalty success, we're expanding Delta's international footprint in 2026 and beyond, while continuing to grow our margins. To support profitable growth, we're leveraging best-in-class joint ventures and investing in the renewal and expansion of our wide-body fleet. This morning, we announced an order for 30 Boeing 787-10s with options for 30 more, separate delivery starting in 2031. These aircraft will enhance our international network, deliver superior economics and extend our long capabilities.

As we look ahead to our next century of flight, my optimism for Delta's future has never been brighter. Much of our strong positioning today is thanks to the leadership and the vision of Glen Hauenstein. Glen has not only transformed our commercial strategy, but he has been an incredible copilot throughout our journey to make Delta the world's best and most profitable airline. His unwavering customer focus and strategic discipline have built a world-class global network firmly establishing Delta as the airline of choice for premium travelers.

Glen's legacy is woven into the fabric of our company and his vision will continue to guide us. Thanks to Glen's leadership and the talented team that he has built, we have a deep bench to support a seamless transition. With Glen's retirement next month, Joe Esposito has been elevated to Chief Commercial Officer. With 35 years at Delta, much of it spent working very closely with Glen, Joe has led the teams behind our global network planning and revenue management. This continuity ensures our commercial organization remains in excellent hands. Glen, it's been an honor and a privilege to work with you over these past 2 decades. On behalf of the Delta family, thank you for your incredible leadership and your friendship. You'll always be part of Delta and your impact on our company and our industry cannot be overstated.

Now I'm pleased to hand it over to Glen for one last earnings call update. Glen?

Well, thank you, and thank you so much for those kind words. I am really truly grateful to have worked by your side for these last 20 years, and I'm deeply proud of what we've accomplished together. Our strategy has proven, our culture is strong and our team is truly the best in the business.

Looking to the future, I'm confident that Delta's commercial team will continue to extend our leadership. As you mentioned, Joe and I have worked closely together for the past 20 years, and he will be supported by an exceptional team of senior executives that our investors know well. Paul Baldoni in Network Planning, Roberto Ioriatti in Revenue Management and Dwight James in Loyalty and Steve Sear, Global sales and distribution have combined more than 100 years of experience at Delta.

Together, we've reengineered Delta's global network and building customer-focused airline, while diversifying revenue into higher-margin sources. We've expanded our premium products and services align customer value to price paid and made generational investments in our airport facilities and lounge networks. At the same time, we've created an incredibly powerful loyalty program that extends beyond the flight and provides a more durable financial foundation. This consistent and integrated strategy positions Delta with a sustained unit revenue premium of nearly 115%, relative to the industry.

Last year's performance truly showcased Delta's differentiation and industry leadership. In 2025, we delivered record revenue of $58.3 billion, up 2.3% year-over-year with diversified revenue streams now representing 60% of total revenue. Premium revenue grew 7%, reflecting a robust demand for our most popular products, while cargo revenue increased 9% and maintenance repair and overhaul revenue grew 25%.

Total loyalty revenue improved 6% and travel products continued to grow at double-digit rates. Our loyalty ecosystem remains a powerful engine of enterprise value, anchored by the strength of the SkyMiles program, a highly engaged member base and our exclusive co-brand partnership with American Express. For the year, American Express remuneration grew 11% to $8.2 billion, driven by a fourth consecutive year of more than 1 million new card acquisitions and double-digit year-over-year co-brand spend growth in every quarter.

This is an impressive performance underscores the power of the Delta brand and the success of our integrated commercial and customer strategy. Roughly 1/3 of active SkyMiles members carry a co-brand card, and we see significant runway ahead as member engagement and penetration continues to rise. In 2026, we expect high single-digit growth in co-brand remuneration, keeping us on track to achieve our $10 billion goal within the next few years.

For the December quarter, Delta delivered a record revenue of $14.6 billion, 1.2% higher than in 2024, including about 2 points of impact from the government shutdown on capacity growth of 1%. Consistent with the full year, diverse revenue streams led with high single-digit growth period over-year. Demand trends were healthy outside of the temporary impact from the FAA mandated flight reductions with Premium showing continued strength and consumers demonstrating resilience through the holiday season.

Corporate sales grew by 8% with growth across all sectors, led by banking, consumer services and media. International performance improved significantly from the September quarter with unit revenue growth improving 5 points driven by transatlantic and Pacific.

Turning to our outlook. Delta is well positioned to deliver a positive unit revenue growth throughout 2026, building on the strength of our premium brand, deep loyalty engagement and continued progress on commercial initiatives. We are heading into 2026 with robust demand and a balanced industry supply-demand environment with March quarter revenue expected to increase 5% to 7% year-over-year, several points ahead of capacity growth.

As Ed mentioned, the year has started off with great momentum. Last week, cash sales were the highest in our 100-year history with strength across the booking curve and in all geographies. Historically, March has been the strongest period for bookings, so it is very encouraging to be setting new records here in early January. Aligned with U.S. GDP expectations, we plan to grow capacity by 3% for the full year, with all new seat growth concentrated in premium cabins, driven by interior upgrades and new aircraft deliveries.

Domestically, we have balanced growth across our core and coastal hubs and are leveraging our integrated strategy to strengthen our industry-leading position. Internationally, we will build on our leading domestic foundation to expand into high-growth Asia and Middle East markets while continuing to renew our wide-body fleet with larger, more capable and more efficient aircraft.

Beyond network and fleet initiatives, we are focused on better aligning products and price to the value delivered. This expands our ability to sell and service segmented products across every channel and leverages digital platforms to unlock incremental revenues from travel products and partnerships. With this plan, our diverse revenue streams, premium loyalty, cargo, MRO and travel products are expected to continue to lead the growth, further differentiating Delta and positioning us for long-term success.

In closing, I am proud of what we have built together and excited to watch this very experienced leadership team carry our momentum forward. I have never been more confident of Delta's future. To the Delta people, thank you for your passion and commitment to our customers and to one another. It's been the honor of my life to work alongside you. And to our analysts and investment community, thank you so much for your engagement and support throughout the years. I appreciate the confidence you have placed in Delta. And with that, thank you all again, and I'll turn it over to Dan.

Thank you, Glen. And good morning, all. I want to start by recognizing the Delta team for their outstanding work through a demanding holiday season. In the fourth quarter, we delivered pretax profit of $1.3 billion, an operating margin of 10% and earnings of $1.55 per share.

As previously disclosed, the government shutdown reduced pretax profit by $200 million or $0.25 per share. The FAA-mandated flight reduction and weather disruption impacted capacity and nonfuel unit cost growth by about 1 point. For the quarter, nonfuel CASM increased 4% year-over-year on 1% higher capacity.

For the full year, disciplined execution kept nonfuel unit cost growth at 2%, in line with our long-term target of low single digits. Combined with revenue performance, we delivered a full year operating margin of 10%, EPS of $5.82 and a return on invested capital of 12%. Strong cash generation is a key highlight of our performance. We reinvested $4.3 billion in the business, including 38 new aircraft deliveries and continued enhancement to the customer experience and technology.

Free cash flow of $4.6 billion supported debt reduction of $2.6 billion, and we ended the year with gross leverage of 2.4x. We closed the year with adjusted net debt of approximately $14 billion and unencumbered assets of $35 billion, positioning Delta with the strongest balance sheet and the highest credit quality in our history. I'm proud of how the team navigated 2025 staying focused on what we control and extending Delta's leadership even in the year of unexpected challenges.

Looking ahead, we are entering 2026 with momentum. For the March quarter, as Glen shared, we expect revenue growth of 5% to 7% year-over-year, with positive unit revenue growth. With that, we expect first quarter earnings of $0.50 to $0.90 per share and an operating margin of 4.5% to 6%, both improving year-over-year. For the full year, we expect EPS of $6.50 to $7.50, representing 20% year-over-year growth at the midpoint. Free cash flow of $3 billion to $4 billion and leverage of 2x by year-end. This outlook reflects margin expansion from growing high-margin diverse revenue streams while maintaining disciplined cost management.

On nonfuel costs, we expect another year within our long-term framework of low single digit. And as we prepare the fleet for peak summer, the first quarter nonfuel CASM growth is expected to be modestly above the full year average. We are driving efficiencies across the operation, improving aircraft availability, scaling into our resources and deploying new technology, which enables continued investment in our people and in the customer experience while delivering on a competitive cost performance.

Strong earnings growth will drive higher operating cash flow supporting reinvestment and higher return opportunities. In 2026, we plan CapEx of $5.5 billion, including around 50 aircraft deliveries and ongoing investment in customer experience and technology. Our free cash flow outlook of $3 billion to $4 billion remains within our long-term target, though lower than 2025 due to increased capital investment and our transition to becoming a partial taxpayer.

Debt reduction remains our top capital allocation priority, with opportunity to grow shareholder returns as we continue to reduce leverage. With today's aircraft order, I'd like to highlight how our fleet strategy is positioning Delta for the future, enhancing the customer experience, driving operational improvement and supporting higher margin expansion.

Domestically, prioritizing flying on high-margin, large narrow-body aircraft, retiring older fleets and building scale across our fleet types. This unlocks maintenance and crew efficiencies, elevates customer experience and improve fuel burden. For our international franchise, our growing next-generation wide-body fleet, strong domestic foundation and leading joint ventures will enable further global expansion.

New wide-body aircraft deliver up to 10 points margin advantage over aircraft they replace, offering more premium seating, 25% better fuel efficiency and expanded cargo capability. Today's Boeing 787 order enhances diversity of our wide-body order book while creating cost-efficient scale, across all wide-body fleets.

Before we move to Q&A, I want to highlight our ongoing commitment to financial reporting as the business evolves. We're providing additional detail on third-party maintenance, repair and overhaul business, including revenue and cost. MRO is a unique Delta capability with strong growth potential furthering the differentiation and durability. [indiscernible] growth profile will separate MRO from our nonfuel unit cost metrics for preserving visibility into the core airline cost trends, while also realigning loyalty-related revenue components to better match our reporting of how we operate.

Finally, I want to recognize Glen. Over the past 5 years, he's been an invaluable mentor offering guidance, wisdom and partnership, which I will greatly, deeply grateful for. Glen's impact and vision have redefined success in our industry and the world-class team he built will continue to extend Delta's leadership well into the future. Thank you, Glen. And with that, I'll hand it back to Julie for Q&A.

Matthew, we're now ready to open it up to analysts' questions. .

[Operator Instructions] Your first question is coming from Jamie Baker from JPMorgan.

Look, nothing but accolades from the JPMorgan team. Glen, you've always been so gracious and patient with us. We're really going to miss these interactions. First question for Ed. I know it's early innings, but if this 10% rate [ cap is codified ] and becomes reality and withstands legal scrutiny and all that kind of stuff, where does that leave Delta relative to your competitors? I mean you have higher card fees. You lean into premium. If industry loyalty does take a hit, is the natural conclusion that higher-end loyalty outperforms lower end? Or should we be thinking about it differently?

Well, thanks, Jamie, and I could not agree with you more about your comments about Glen. As you said and prefaced, it's way early innings. And so it's really, really hard to speculate. And candidly, the challenges to having that comment of whatever the President is looking to do here brought into actual delivery [indiscernible] would likely require legislation. And I believe your company was out this morning with some pretty strong comments in terms of their disagreement and willingness to fight that potential order. That all said, we, at Delta, have the premium card in the industry. No question, the value of what we created distinction differentiation. If it did come to pass, it would be greater.

I think one of the big issues and challenges with the potential order is the fact that it would actually restrict the lower end consumer from having access to any credit, not just what the interest rate they're paying, which would upend the whole credit card industry. So from our standpoint, we'll be working closely with American Express, but I don't see any way we could even begin to contemplate how that would be implemented.

Okay. And then a follow-up for Glen. And this is actually a retirement-related question. And look, maybe you don't think of these terms, but is there anything about the industry's evolution or Delta's evolution that maybe you, let's say, regret that you won't be at the table for. I mean you obviously have a strong view on what Delta can accomplish going forward. But is there anything in particular that you're just personally disappointed to be missing

I think there's a couple of things I'll mention here. One is the continued evolution of our partnerships. And I think these are the strongest partnerships in the world with the strongest airlines in the world. So whether it's LATAM or whether it's Korean, these are very, very deep relationships, which I think are still in their infancy.

And I think one of the things that's underappreciated is also we have equity stakes in all of them. And so we are at the table with them. And I do think that one of my counsels to Julie continue to highlight that because those are winning carriers and their stocks are appreciating well as well. And I think that's undervalued in our valuation. So I think that the international -- continued expansion of international, the new fleets, like if you're an airline nerd like I am, who doesn't like to see how the new fleets perform once they get here.

The continue -- another thing I think is undervalued at Delta is the fact that we've made these generational builds that can really sustain growth for Delta over the next 15 to 20 years without incremental CapEx into facility. So seeing those -- seeing the Salt Lake City facility that we've just built get used over the next 10 to 15 years, there's so much I'm going to miss. There's so much I'm not going to miss too. Controlling our own calendar is key at this age, as you realize you don't have infinity left in the world. So there are so many exciting things at Delta. And the team is really an extraordinary team and the people of Delta have just been amazing to get to know over the past 20 years. So there's tons I'll miss. Thanks to that interesting question.

Your next question is coming from Mike Linenberg from Deutsche Bank.

I want to echo Jamie's words. I mean, Glen, you're an industry thought leader and innovator. I mean always willing to push the envelope. I mean I just -- I feel privileged to have had the opportunity to have learned from you for all these years. So thank you.

Thank you for the kind words.

And I guess with that, you'll get my last question. I have really only one question here and just sort of drilling down. I mean this acceleration that we are seeing on demand from the fourth quarter into the March quarter, I mean, you talked about all groups and all geographies. But as I recall, in the past, you did talk about that the leverage was maybe going to be in main cabin in 2026. And I wonder whether or not you are seeing that the lower end of the fare structure is truly moving up and that's helping to drive that acceleration.

And combined with that, just the booking curve? I mean, is there any -- have we seen the booking curve really shift back to normality? Or are there any sort of idiosyncrasies about that curve that are maybe helping that acceleration. So just the revenue down.

Sure. the revenue has definitely accelerated here, and we're very excited about it, and it's across all entities. It's across all geographies. And the booking curve really hasn't moved out that far. It's just kind of returned to a more normal level. I think what happened in the fourth quarter, it was all over the place, right, is that by the time we got to the shutdown in November and we had the Secretary of Transportation questioning the safety of Air Traffic Control. There was a lot of noise in fourth quarter.

And so -- but I do think if we took out that noise and saw where we were in October and see where we are sitting today, we are a step above where we were in October, which was a fantastic month for the company. And what's really exciting about the return of business as we head into '26 is '25 grew. I think it's 8% it grew. But it was mostly unfair. And right now, we're seeing both fair and traffic. And so seeing that traffic come back is, I think they're really good start to 2026.

Your next question is coming from John Godyn from Citi Research.

I wanted to kind of follow up on the concept of accelerating trends as well, but specifically on corporate demand and what you're seeing there. It sounds like the numbers to start the year are quite good. And I was curious, is that the broader environment? Is that market share gains? Anything you can say to help us to unpack that would be fantastic.

Well, I think it is the broader market. I do think that Delta's market share has never been higher. But that's a gradual -- that's year after year, knocking away 0.5 point, 0.5 point, 0.5 point. So I think our market share is in a fantastic position, but -- and it's at all-time highs, but I do think it's a much broader than just Delta at this point. Joe, do you have any comments? .

No, I think we're setting up for a really good economy, and everybody can feel that. And the corporate environment is optimistic about their travel plans for the future. So I think those things are lining up for a positive 2026.

Got it. And if I could just ask a follow-up on that. Just broadening up and linking it to the guidance a little bit. Obviously, an accelerating environment is fantastic. Are we in a situation where things need to accelerate even further and step even higher to get us to the high end of the annual guidance or even exceed it or if we just saw these trends continue that you're observing right out of the gate, that's enough to get us there. I'm just trying to sensitize the guidance.

John, it's Ed, I appreciate that question. And it's the second week in January. It's really hard to take a few weeks of bookings and reach any kind of early conclusion. We're encouraged by what we saw. And absolutely, if the momentum that we currently see continues will be fine, we'll do well on our guidance range. That said, we also learned the volatility. We're reminded of the volatility of the industry this past year. And we want to make certain that we have a bit of caution as we project how we'll do.

Let me just add 1 thing because I didn't -- in respect, I didn't really answer Mike Linenberg's question about Main Cabin. And we have not really seen Main Cabin move yet. So I think when you think about the higher end of our guide, that would definitely be the Main Cabin starting to move. And I do think that it will move in '26, we just have not seen it yet.

Your next question is coming from Conor Cunningham from Melius Research.

Echoing everyone else, Glen, congrats on the retirement. We've learned a ton from you over the years. So thanks again. Maybe I could -- maybe I can kick it over to Joe actually. So I mean, I was hoping you could just talk about your priorities as you take on the new role. You've obviously helped mold the Delta network for a long time. But just curious how you approach things with the commercial hat on and if the strategy changes at all? Just any thoughts there would be helpful. .

Yes. Thanks, Conor. Overall, I feel very fortunate and grateful for working with Glen for 20-plus years now. And we've learned so much, and we've been there from the beginning of transforming Delta. I think that theme though carries over into consistency and continuity. Our strategies aren't changing. In fact, I mean, we're going to be digging even deeper into those strategies for further integration. .

I think the integration is still in the early innings of how we go to market from a complete commercial perspective. It used to be network and price, now it's so much more with the consumer and Amex and what we do for the customer and club. So I mean there's lots of runway ahead for us in product deployment. We've been doing this for over 15 years, and I think there's still a lot more runway to go in where we're going on the product side.

We're in the early stages of merchandising. There's more to do with Amex, premium products and the fleet that we're getting for the future is really exciting. So I think there's a lot to look forward to. There's a lot to build off of what we've already done. And I'm honored to lead the commercial team and proud to work with a really talented group of people that support us, both not only within the commercial organization, but operationally.

So again, I want to thank Glen for all we've done together. And I think there's a lot more to do.

Great. And maybe I can, Glen, maybe you want to jump into, it's up to you. But like just on the geographies in general, as you look about -- you talked a little bit about Main Cabin on the U.S. side. And I think the overall assumption from a lot of us is that there's a lot of opportunity in the U.S. domestic market, but international has been wildly resilient and obviously picked up again in the fourth quarter. So if you could just talk about your expectations for transatlantic in Asia and so on, that would be super helpful.

Do you want to take a shot?

Yes, I'll take it. The transatlantic and specific resiliency come from I think years of building the domestic network to have that strong foundation to launch from. You take the loyalty of cities, you think about New York, Los Angeles, Boston and new gateways, we've been able to expand with. You layer on top of that new airplanes being able to monetize that premium cabin.

So I think the -- a lot of it is coming together and the order of the 787 is just another future marker out there for innovation and especially when you think about in the widebody space, fleet efficiency is really what wins the day. If you think about taking a 767 and replacing it with a 350 or 787 drives that incremental margin, drives better product and drives incremental margin.

Your next question is coming from Ravi Shanker from Morgan Stanley.

Glen, obviously, congratulations on an incredible career. You will be tremendously missed. But I'm also very envious of your upcoming travel plans. Maybe a couple of -- maybe I'll start with my follow-up here. Obviously, a lots of questions and a strong start in January. Glen, do you have any indication that there's been maybe some pent-up demand from 3Q or 4Q? That's now coming on maybe in corporate or international, which maybe question of the sustainability of the strength or do you [indiscernible]?

Well, as Ed mentioned in his opening remarks, '25 had some very choppy points in it. And I think there was a lot of reason for people to hesitate to travel at different points in the year for different reasons. And so as we look at '26, assuming that the core demand stabilizes, there is huge upside for us across all entities, I think.

So especially as you get to the latter part of the first quarter and into the second quarter where the tariff uncertainty and the economic uncertainty was kind of hitting the crescendo, I think that's what gives us confidence that '26 is going to be a great year.

Understood. That's helpful. And maybe also if you guys could unpack the previous response on the 787s, again, what was the rationale for that aircraft versus 350 or maybe some others. And also, it almost sounds like you're planning to deploy them differently than your existing wide-bodies or on very specific routes? So any clarity there would be helpful even though I know that's [ someway off ].

Yes. Thanks, Ravi. I think it's a natural evolution in our fleet. When you think about -- I think our priorities up into this point was to get critical mass into the 350 and the 339 and we're well on our way to do that, and that drives great efficiency and that efficiency is needed in the widebody category.

When we look out to the future, the 787 is a great airplane, financially, a great airplane. We're able to do a lot with the [indiscernible] version of this on the premium seating. It's a great cargo airplane. And it also drives diversification within our fleet, both not only on the airframe but on the engine side. So it's a natural fit, especially when that starts to replace the 767-400s, which is slated to do. It's designed for growth and replacement. And when you think about swapping a 764 or 763 to a 787-10, it's a very powerful change in a step function improvement in margin.

Since it's my last call, I can be a little [ flippant ] and say, this one's too soft. This one is just right. If you remember, I think that was Goldilocks, we have 3 fleets and one has long range. One has a lot of capabilities. One is a category killer on CASM. And one is kind of our [ milk run ] airplane that's going to do most of the spoke services out of our core hubs. So I think we've got a really good array just like we do domestically, where we can go all the way from the '76 year up to. And so I think this gives us a lot of versatility moving forward and best in class for economics.

Your next question is coming from Savi Syth from Raymond James.

And I'd like to echo all the kind of glowing commentary on Glen and congratulations to both Glen here and what would like to actually maybe ask a 2-part question that's very similar on the operations side. Can Delta really differentiated itself in terms of kind of reliability and recoverability historically. It was kind of once described to me but I know your time at [ Swatch ] that was dismantled here in COVID and [ had to put back ] together. .

So first, I was wondering if you could provide an assessment on how operational reliability and recoverability stacks up today compared to where it was during COVID. And second, with kind of many of your competitors looking to kind of meet the standards that you have set, what's your assessment on how your relative performance has evolved? And is that still a strong differentiator, especially as you have [indiscernible] discussions?

Savi, this is Ed. Let me take a stab at that. There's no question that we have work to do with respect to the resiliency of our recovery from irregular operations. We're working off of a great foundation. We just were named last week by Cirium as the most on-time airline in North America. So it's not as if we're -- we've got a big hole to fill. .

But that said, with a lot of the change post COVID, including some pretty significant changes in our pilot contract in terms of how we route and reroute and schedule pilots, particularly at times of change, have caused some difficulties in providing the level of reliability that we like in the recovery aspect. So we're all hands on deck in that regard.

We know what the factors are. That's been driving us. It's just going to take us a little bit of time to get after, but we're working very, very closely with our flight ops team, our maintenance team, our technology team, our ops control team as well as with the pilots union to insure because our pilots don't like some of the recovery challenges with that either to make certain that we return to the top, not just in on time, but also an overall recovery.

And can I -- just a follow-up on that. As you think about your comparison and your competitors really trying to kind of meet that standard that you've set? Like is there something in how Delta approaches this that maintains your leadership? Or how should we think about that? And how is that in terms of all the corporate discussions that you're having?

Well, I think we're #1 across the board in almost every metric in this industry that you can look at. So I don't believe we've lost our leadership in total. But yes, I think that -- listen, we said all along, I've said all along, we want there to be a healthier industry, a higher-quality form of experience for customers that forget Delta, everyone can see the industry in a much better more reliable light. And I think one of the great things that Delta has done for the industry has raised the bar in the spotlight on what can be done collectively on many levels. And this will be the next opportunity for us.

I just want to Echo what Ed said is that a better industry makes for selling more tickets at an industry level, not just at A delta level that and so raising the bar is a great thing for the industry.

Your next question is comes from Duane Finningworth from Evercore ISI.

Glen, I was struggling with what to get you. I thought I'd ask you one last question as a parting gift, but congratulations. If we go back into the archives of your early career, maybe back to the days trying to restructure Alitalia. What are the biggest surprises in how the industry and how Delta evolved relative to what you might have thought at that point in your career?

I think Ed and I have shared this journey together. And when you think about where we enter Delta, I think a lot of people would look and say, well, why do you go there? Because it was in such trouble at the time we joined. And so I remember to this day that I wrote [ jerry Greenstein ] a note saying that I wanted to help restore Delta back to its rightful place at the top of the U.S. aviation industry.

And I think not to sound bold or arrogant, but I think we could say mission accomplished on that. And I think it's underappreciated how much hard work it was and how many bold things we had to do to get here. And I think that's what I would impart on you and our team is in order to stay here now, you have to continue to be bold. You have to continue to look beyond what the next quarter is or what the next year is and look what the next decade looks like and where do you want this company to be 10 years from now. And I think this team does that every day. And I'm really proud to be a part of that, and I know the future is going to be super exciting.

Congratulations again. And then just to switch gears on MRO, Maybe, Dan, you're providing increased transparency. Can you speak a little bit about the outlook for that segment, revenue growth, margin expansion and if there are any capital commitments embedded in the CapEx outlook for this year.

Sure, Duane. Thank you. Quite optimistic about the MRO business. I think they had a really good 2025 great commercial wins building the backlog. I think this is a business that we're excited to see across the $1 billion mark and one that we continue to hold out and see it as a 2 -- then getting to $2 billion, then getting to $3 billion of top line that it can continue to grow. This is a business that where it's positioned, it's high single-digit margins today, it should be mid-teens and oen that we have [indiscernible] capital, but it's 1 of those things that you just have to consistently stay after as it relates to both shop capacity, but also repair capability.

And how you think about it. It's something that Delta team is pulling off a really strong maintenance capability. and that we can extend to third party. So we're quite excited about it. We do think it is one of those elements that truly is unique to Delta and related to our differentiation and durability, and that's why we want to make sure that we provide you that our investors with that transparency over time.

Your next question is coming from Chris Wetherbee from Wells Fargo.

And congrats, Glen. Obviously, we haven't got to spend a lot of time together, but your reputation certainly transcends. And enjoy the next leg of the journey here. I guess I wanted to ask a question about premium versus main cabin. Obviously, the revenue growth spread has been very wide here in the back half of '25.

So as we think about sort of a normalization and maybe improvement as we go through '26 what can that sort of spread look like? Obviously, capacity is going to be weighted towards premium, but what do you think normal looks like in that relationship?

Well, the margin spreads, as you indicated, have never been greater. And as you know, the bottom end of the industry and the commodity side of the business has been struggling greatly. And so I do think there's -- we saw consolidation earlier in the week. We're waiting to see what happens with Spirit here as it continues to try and restructure. But that sector has been unable to grow here for the last several years.

And when that sector is not growing, it can't continue its CASM, CASM goes up significantly every quarter, more than ours. And so that's become a real challenge for that sector and the industry. I don't -- Scott Kirby would say, it's only math, but I think that challenge continues to haunt that side of the industry, and it has to rebalance itself at some point. And the only way I can do that is to get their revenue basis up because their costs aren't going down. And so it's taken longer than I would have thought to be quite honest. But I believe it's still to come, and that has pure upside to us.

Okay. That's super helpful. And then I guess a quick follow-up. Just as you think about the guidance ranges that you guys have given. It seems like there's a path towards the upside of that. I guess what are the things that we should be thinking about as risk to the downside? Outside of obvious macro challenges that may arise. But I guess in terms of the trends that you're seeing so far, they're relatively robust. Anything we should be thinking about it would be 1Q or we think out a little bit further into 2026.

This is Ed. So the risks -- you don't have to go too far to think about what the risk could be. Just look at last year, and where we were a year ago, we thought we were going to have a banner year and gave guidance kind of similar to what we're giving today, and it got derailed a little bit. So I think the new year offers optimism for a different outlook than we were a year ago. I think relative to the administration and their priorities, I think -- we're all 1 year smarter and more conditioned to expect maybe the unexpected in some of the policy approach.

And I think we're -- if you look at the economy, if you look at strength of the market and you look at how not just airlines are looking at, you're looking at high-end consumers are feeling about their opportunities. They're quite bullish. And so that's how I frame it. .

Your next question is coming from Andrew Didora from Bank of America.

Actually, just wanted to touch upon the free cash flow generation here. I think it's obviously very unique in Delta. But Dan, today, you you're giving us all a closer look at MRO, loyalty and the like. When you look at the drivers of this free cash flow generation year in, year out, how much of this comes from these ancillary businesses versus the core airline? Does it over index -- is it a bigger percentage of free cash flow then as a percentage of your revenues?

The -- when you think about it, free cash flow is ultimately driven by your margins and drive your operating cash flow. So I would say the loyalty premium, certainly, given its margin profile, has an outsized impact on it, things like MRO that are smaller things like cargo have less impact than the core, but premium would be outsized related to it.

That makes sense. And when we think about kind of this free cash flow going forward, when we think about the CapEx side of the equation, any step-up in CapEx coming over the next few years, maybe particularly because of the new Boeing order this morning. Anything there to think about?

Andrew, this is Ed. No. We've been very consistent over the last decade of CapEx in that $5 billion, some years a little lower, some years a little higher range. And while clearly, there could be a one-off, maybe a year with a little bit more, broadly speaking, that we're very disciplined about that. And I have one of the real exciting opportunities for Delta.

When you look at where our leverage ratio is, where it's going, the continued free cash flow generation. And I said on CNBC this morning, I think the most tangible return we can generate for our shareholders is that free cash flow opportunity. And as the balance sheet continues to be delivered, there's going to be even more return possibilities for our shareholders. It's not going to go into starting to try to get on a big growth spurt. That's not an answer that we've seen people try that in the past that never ends up well.

Your next question is coming from David Vernon from Bernstein.

Glen, all the best for the future. Just kind of looking at the bigger picture around the commentary that you guys have provided today, it sounds like Delta revenue is accelerating, but the Main Cabin isn't. And I'm just wondering if that more plainly, just means that this is about Delta and the strategies you guys put in place kind of working for Delta and maybe the industry outlook is a bit more mixed. And if that's right, what does that mean for like kind of competitive capacity as you're looking out at the market for 2026, particularly in relation to your hubs and where capacity is shifting in the marketplace. Is it right to think that maybe you guys have started to carve out a path that's a little bit easier to glide to a more mixed sort of industry outlook?

Well, I think that's what '25 was a proof point on is that the industry, if you look at it, was very challenged in '25. And Delta was at the very top of the industry. And I believe when everybody reports, this is my hypothesis that we will never have been in our past a higher percentage of the industry's total profits than we were in '25.

And so as you think about what's working here at Delta, the diversification of the revenue streams, the continued focus on premium products and services, I think, yes, we have charted a different path. And we don't control what decisions are made at other airlines, but I do think that those who cater to more commoditized, you've seen them trying to change, right?

You've seen Southwest going in a very different direction, talking about clubs, talking about international. So I do think we have charted our own path, and I do think there's a lot of ups. The tremendous upside for us when the industry finally does reckon with the fact that the commodities are not making any money, and they either have to be removed or they have to be upgraded.

And this kind of competitive capacity as you -- like last year, we were talking about how competitive capacity a little more subdued in your core hubs. Obviously, the industry entered in a very different position in terms of what I thought it's growth aspirations are going to be last year. But I'm just wondering, is there also a little bit of a [indiscernible] you guys around some of your core hubs? .

Well, I think -- this is Joe. Looking at competitive capacity, it's in a really good place for us as we start the year. I think the -- to your earlier comments, the bottom side of the industry has got -- has been and will continue to rationalize that capacity. And you've seen a lot of the unprofitable part coming out. But if they're only -- when you look at how they are going to come out of this, it's either going to be an internal, external restructuring. So the competitive capacity is good today. We offer our customers great products in our own hubs, and we're very competitive in all of our hubs.

Your next question is coming from Michael Goldie from BMO Capital Markets.

Revenue diversification continues with non-main cap and CapEx kind of getting to that 61%, 61.5% this quarter. Seat growth is really concentrated in premium going forward. Where do you see this non-Main Cabin revenue mix over the longer term? Is it 65%, 70% in the coming years?

I don't think we're seeking out a number here. We're reacting to how customers behave and how the industry construct it. So again, as we talked about the margins being in the premium products right now, at some point, this is going to shift, and it will shift to have, hopefully, the premiums not go down, but the Main Cabin go up because that's just how the math has to work.

And so I think as you look forward to [indiscernible] it's clearly upside for Delta, but some place the industry has to go. And I think we thought that it would happen before now. But it's taken a long time. But it's happening. It's happening with capacity reductions, it's happening with consolidation, and it will continue to happen around us until Main Cabin returns accelerate.

As a follow-up on the industry consolidation, we saw this week, you've had Hawaiian, a year or 2 ago Spirit. When you step back, do you think the landscape will see further consolidation in the coming years or eventually find a plateau?

I think it's very clear that you're going to see further rationalization, can come in lots of forms. It could be in consolidation, it could be liquidation, could be internal, can be the external drivers as we've seen in the industry with activists involved. But I think you're going to see rationalization in any carrier that's not earning its cost of capital is already experiencing significant duress and distress amongst their ownership base and they need to continue to work to enhance their business models.

Your next question is coming from Catherine O'Brien from Goldman Sachs.

And Glen, another congratulations on such an amazing career. It's really been a pleasure getting to work with you. And I hope you're looking forward to a lot more time in Italy in 2026. And maybe just speaking of international destinations, maybe a shorter-term one. But could you walk us through how you're thinking through sequential trends across each of your geographies in 1Q on a RASM basis. It all sounded positive in the prepared remarks. So just I guess any bright spots that stand out in particular?

I'll let Joe take that question because I'm easing out of this reading these reports every morning. So he's probably more up-to-date than I I'm.

I think our sequential trends in international and domestic are both really positive as we go into 2026. So we've seen the most sequential trends international from third quarter to fourth quarter. We had identified more of a blip for the summer of 2025, and that played out the way we wanted to, as improving those trends as we went along. And I think that's going to continue, especially with -- as we go into 2026. If you look at the transatlantic competitive capacity looks really good as we go forward in the summer.

And looking forward, our partners are well positioned. I think we're expanding conservatively, but from a position of strength. And the traveling public is very excited about new destinations. When you look at where we've added this year into -- and we've put that out to our loyalty program for a vote. So we're doing some kind of unique things, some exciting things. On the Pacific side, our cornerstone with the Pacific is Korean Air, and they're a great partner. And we've built our foundation around the [ Incheon Hub ]. And also now expanding a little bit beyond into the biggest economy.

So we've seen really good progression as Korean work through their merger. The Incheon Hub has been a fantastic hub to connect through. So there's only greater upside into pushing our traffic through Incheon and also making sure we have access to some of the biggest economies out there like Taipei, Hong Kong and there will be a few others later in the next couple of years. And finally, in Latin America, it's kind of 2 different entities. You've got the short haul, which acts very much like domestic, short-haul in the Caribbean, Central America.

And that moves with domestic and is much more of a leisure operation for us. And we've had a very good Christmas. We've got really good strength in the Christmas bookings, good strength in spring break. And so some of which you're seeing in [ close-in bookings ] and cash sales really goes to the leisure side of spring break, you've got March, April and Easter and that also includes the short-haul Latin America.

And then with our partner, LATAM in South America, further integration into their hubs. They just opened up, the Lima Airport is fairly new and how we move traffic efficiently through South America, and they've got fantastic hubs that they continue to develop, which is only a positive for us for the future.

Okay. Got it. And maybe just like -- sorry, I just want to make sure that international, you're expecting a bigger sequential improvement versus domestic into the first quarter is that what you said?

They're both moving at the same rate, I would say, as we go into the first quarter. I think with international, we have good margin upside. We've closed a lot of those gaps over the years from international to domestic. And there's more, especially when you think about using the fleet and premium products for international.

Okay. And if you guys will allow it, maybe just a bit of a follow-up to your answer to Andrew, Dan. As you work towards your 2x leverage this year on our way to 1x, can you remind us how increasing shareholder returns puts into your capital allocation priorities? I think back at Investor Day, Ed might have noted that you wouldn't necessarily need to be at 1.0 turns of gross leverage to consider share repurchases. What factors that calculus?

Thanks, Katie. You're right. We don't have to be exactly at onetime gross leverage in order to expand the range of shareholder return capabilities and opportunities to create. And every step that we take getting closer to that time continues to afford us those opportunities. First, starting with, as we've done the growth of the dividend rate, which we hopefully will continue. Last year, we put a shelf on the table for repurchase. And it was a 3 year, and I certainly expect we'll be utilizing that over the course of that time frame. And obviously, looking at the multiple and where it's headed. Our priority is very clear for this year. It's continued to pay down debt. But as the year and the next couple of years ago, you're going to see more opportunities explored, and I'll leave it at that.

Matthew, we'll now go to our final analyst question, Tom Fitzgerald at Cowen.

Certainly, Tom Fitzgerald,

Congrats, Glen. Just Curious on -- at Investor Day, you talked a lot about the revenue segmentation and further aligning value with price. So I'd love to hear what's next for that this year. And then on the technology side, just curious with all the advances we're seeing every day. Where do you guys see some low hanging fruit as we move through 2026.

I think we've talked about really having 3 categories for every product, which is basic, main and extra. And that continues to evolve. I think we put those products in place for Comfort+ earlier in the year, and that implementation is producing results that are actually slightly above our internal projections. So as you see us continue to bring that and move that up the ladder to give customers choice not only of the seat, but the actual product that they want to buy with that seat. .

And really disaggregating that out. And that should be rolled out pretty much throughout '26 and as part of our initiatives and our Delta initiatives in our plan and hopefully, those exceed our own expectations of how people select because I think that -- if you were to offer a $500 ticket, there was no reason for you to ever want to pay more than $500 because it was fully loaded. Now we have -- that seat is $500, but you can buy it for $450, if you're willing to get the seat assignment at 48 hours, if you're going to have it refundable and then all the way up to extra where it's fully refundable and you get the best seats unlocked at that time.

So I think -- it's the seat and then it's the product attributes, and we'll be bringing that in '26. That's one of our '26 initiatives. Joe, do you want to add anything?

No. No, that's exactly right. And we've been incredibly thoughtful about not going too fast, making sure that we're measured in that approach. We're still testing Comfort basic right now. We're going to expand that for the rest of this year. The great thing is when you think about merchandising is the products you're able to put in there we've got a lot of products. We're innovating with more products, and there's just more we can offer the customer based on what they're willing to pay.

And I think that's the key to merchandising in the future. This is -- if you look further out, this continues to be multibillion dollars opportunities [indiscernible] to add high-value, lower cost, lower margin -- higher-margin products that we don't have on the shelf today. And that's really what our retailing tools are going to enable over the next several years.

Okay. That will wrap up the analyst portion of our call. I'll now turn it over to Trebor Banstetter to open the media potion. .

Thank you, Julie. Matthew, if you could read the instructions to the media for queuing up for questions, and then we'll get into the final part of the call.

Certainly. At this time, we'll be conducting a Q&A session for media questions. [Operator Instructions] There are no media questions in the queue at this time.

All right. Well, thank you, everyone, for joining us today, and we look forward to talking with you again in April.

Thank you. That concludes today's conference. Thank you for your participation today.

Great. Thank you. So for those don't know, I'm Ravi Shanker, Morgan Stanley's Freight Transportation and Airlines analyst. And for the third year in a row, we are very happy to welcome back to the Consumer Conference Delta Airlines with CEO, Ed Bastian. Ed, thanks so much for being here.

Ravi, it's good to be with you all.

So before I hand it over to Julie for a second, I need to point out that for important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley representative. And Julie, you have your own version of this.

Thank you, Ravi. Thanks for having us. As a reminder, today's presentation contains forward-looking statements that represent our expectations about future events. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that may cause those differences are outlined in our SEC filings. Over to you, Ravi.

Thank you, Julie. So Ed, thanks again for coming back here. This is Delta's third year of the conference. You're the only airline in attendance and have been the entire time, which I think says a lot about your differentiation, which we'll get to in a second. But in keeping with that theme, obviously, 2025 has been another really volatile year. How would you summarize the year here sitting here in the first week of December, not wanting to jinx what happens in the next few weeks?

Well, thank you for not -- putting that out there. And we do appreciate coming because this is the form that we want to be in as we continue to grow what is one of the most loved and trusted brands, consumer brands in our country. It's the right place for Delta to be at. '25, I think is -- as you look back on the year, it has been a volatile year, whether it's the tariff issues that we faced in the early part of the year, the consumer as well as business confidence freezing for the better part of several months in the early spring right through just the start of the summer.

You look at the government coming through and mandating a shutdown of the airspace for us, which had never happened before, the longest government shutdown in history. And you look at how we performed through that period, we performed very, very well. We're going to end up the year with profits of roughly $5 billion, which is just shy of where we were a year ago. That's against an industry backdrop where the industry ex-Delta is expected to be down 40% this year, and Delta is relatively flat. And in fact, just heading into the fourth quarter, which was doing great until we got to that mandated shutdown starting around November 7.

We were right on track for the $5.2 billion, which have been exactly that impact. We looked at the impact of the shutdown is going to cost us about $200 million. We saw from that date, the Friday, November 7, right through for about 10 days, somewhere between a 5% to 10% reduction, immediate reduction in bookings. Business was a big part of that because people were trying to get their last business trip in prior to Thanksgiving, everybody pulled up. Refunds also were part of that because refunds grew significantly.

None of that was in our forecast or plan. That $0.25 impact on the quarter, we'll do our very best to make up. But the reality is that we're through it. Thanksgiving was strong. We just had Cyber Monday. We had Travel Tuesday. We had Sunday this past Sunday, which is always the busiest day of the year for us for travel. Once again was, it's an all-time record we set on Sunday. So I think we're through it. It's transitory, and we're looking forward to a strong December, strong close to the year.

Got it. Before I go on, just maybe a couple of follow-ups there because that's new information used to break you out. So that's like a onetime thing. You think that's done. There's no lingering impact for the rest of the holiday season.

Yes. We don't see any lingerings. Certainly, there was a delay in booking decisions during that period, which we're anticipating in December, making up some ground on that. But fundamentally, it was a November event.

Got it. And when you look at that number you gave out, the $0.25 to $200 million, that is isolated to the government impact only. It does not include any -- like you said, if you look to make up for it or fuel or any other resumption of the quarter.

I don't -- other than that, we're performing completely within expectations.

Got it. But also just to kind of finalize the message for the fourth quarter, you're saying that holiday travel, like everything else is perfectly normal, both domestic and international, kind of you don't see any...

International was not affected during this period. The effect really was isolated to the domestic system. And we think about it when you've got the Secretary of Transportation telling people, we don't have controllers, questioning the safety at some level of travel, which has never before happened.

People said, well, I'm going to hold up in making decisions. It happened too late in the quarter for us to make it back up again, obviously, you got late in the year. But on the go-forward basis, first half of the quarter was doing great. We had this little lull. We look at the beginning of '26. The bookings look really strong. Christmas looks and New Years looks strong. So I think we're through it.

Got it. So just going back to what you said about kind of you guys are doing great in '25 despite all of the, honestly, chaos that unfolded. That's really impressive just given this was an industry that if there was like one cloud in the sky, like there will be chaos numbers. How have you built that resilience into your model? Like what is that area of differentiation that you think is...

Well, there's two things. The differentiation in terms of our product mix, who we are as a company. I know the airline industry is struggling for differentiation across the broad landscape. This is something we've been after for 15 years. Following the Northwest acquisition in 2010, we said that if we don't have a differentiated product and the ability to drive a premium experience, we're going to die. In fact, we have had all been through bankruptcies in the early part of the 2000s. And we came out of it saying, first we have to create the reliability, you have to give the tools to your people to do a great job.

You have to build confidence in your customers and in your communities, and that's what we've been after. And you've seen over this last -- certainly this last decade, last 10 years, that just continuing to grow actually had an acceleration during COVID. Even while people weren't traveling, people were looking to where they were going to go and the premiumization of how -- when Delta was traveling and flying block and middle seats, not furloughing the single -- all the steps we took that were true to those values that we suppose have all now come to light.

One thing when you look at the backdrop within the industry, every airline in the United States has changed their strategy post-COVID, you think about it. United is doing their best to copy us, and I don't blame them. I would copy Delta too if I was them. They're smart. But you talk about some of these other airlines, whether it's Spirit going through a second bankruptcy and you got -- Frontier saying they're going to put more premium offerings out, Southwest changing their American change.

Everyone has changed their mind except Delta. We are consistent and that consistency of execution and alignment over time is far more important than any individual strategy decision. Our team is aligned. Our customers know what to expect. We continue to gain momentum, whether it's the Delta One experience and the One lounge I was just speaking with my friend here about in JFK, but throughout our system, the airports are built. The airports are done. We have the fleet that we've maintained consistency of delivery year in and year out. We've been getting our product out there, growing the technology.

There's a lot of talk in our industry, as you know, about free WiFi. You would think -- the answer isn't have it yet. Delta this month, we're certifying our 1,000th airplane with the free WiFi system worldwide. And that's basically the full system at this point. And we have more planes flying with free, fast WiFi that Starlink has in the sky in total.

And so this consistency of execution started back when. And when you take a year that had the disruption you've seen as well as the cash flow aspect of that, too, the paying down debt this year, I think one of the great tell-tale signs that we're on track is that despite some of the issues we just talked about, we're going to hit our free cash flow number that we committed at the start of the year will be roughly around $4 billion of free cash, all of which is going -- the majority of which is going to pay down debt.

And we're continuing that -- taking that piece of volatility out. So we're controlling what we control. We're controlling our balance sheet. We're controlling the experience. We're creating a differentiation in the market's mind, and that continues to pay great dividends.

Got it. I apologize for asking you a chicken and egg question. But which comes first? Is it the consistency of the values and products from Delta and then the consumer is like, hey, this is amazing. I want that and they adapt. Or does the consumer tell you, hey, these are expectations and then kind of you guys are like we try to stay one step ahead. How do you set the benchmark out there?

Well, we set expectations to -- that customers deserve greater value and create better experiences. And we are in the experience economy. And I'm sure this conference is going to talk a lot about that over the course of the next day or so. When you look at our core consumer, our consumer our households earning a minimum of $100,000 a year in terms of current income. About roughly 40% of U.S. households fit that definition. That cohort has accumulated $50 trillion of wealth since 2019.

When you ask that cohort, what do they want to do with that wealth, their #1 answer we get back is they want to travel. They want experience. And it's not just experience in air travel. It could be concerts, it could be a nice restaurant. It's something that they can invest in themselves. They're done buying things. They want to invest in themselves.

And there's no sign that consumer is tapped out at all. And there's no sign that they've kind of had their fill of that. In fact, and it's at every demographic, every age level, whether it's Gen Zs or millennials who are some of our fastest-growing members of our SkyMiles programs and what they want to experience or the baby boomers who are taking more trips than ever. And you see the seasons being extended internationally. So that's our sweet spot. That's our core. That's over 90% of our revenue base is that consumer. And that consumer is well positioned as we enter the new year.

Got it. Sticking with the topic of Delta's differentiation, not to make you answer for your peers, but there's a very clear gap between like one or two airlines in the industry and the rest of the industry when it comes to returning -- generating a cost and capital and actually generating consistent profitability, right?

And there's been a lot of focus on that this year rightly or wrongly as to what is sustainable and what is not. So if you were to put your analyst hat on, what would you -- what's the future of the industry? Like what -- where do you see this kind of this divergence between the haves and have-nots kind of finally ending up in the next maybe -- years?

Well, it's certainly not sustainable, right? Where you have two airlines generating 100% of the profits of the entire industry. By the way, it's not just the this year phenomenon. It's been happening for several years. with Delta being more than 50% of that profitability. We have 20% of seats in market yet we generate over 50% of the overall profits. So something has to happen at the lower end. And what has to happen is supply is being rationalized to some extent, has to continue to be rationalized.

If you're at the lower end and you don't have a premium concern, you can't sell, you can't price with the higher cost levels that we've all seen that have happened post-COVID. The only thing you can do is you can adjust supply. You can't grow your way out of this. And that's why you see all the changes to the business model. Changes aren't around growth. Changes are around trying to create a higher value experience that they can price for their higher cost.

I don't know what's going to happen, but all I can say is it's probably we're seeing it happen right in front of our eyes. It's not going to continue for too much longer. And whatever happens there, it's going to be to the benefit of Delta. -- the strong will get stronger.

Got it. Do you think 2026 is going to be a fairly consequential year for the industry from this regard?

I think it has the potential to be that. We'll see what happens. I know our setup feels great. I mean when you think about the stuff we just got through this year, hoping for, hopefully, a little more of a stable environment on the political front. And hopefully, we get that. But the reality is, is that we've been tested, right? We said a year ago, we had our investor conference, we said the two things about Delta that we're going to prove, is differentiation and durability.

And we're hitting our free cash number that we committed at the start of the year before knowing any of this stuff, $4 billion of free cash. And secondly, we're continuing to extend the competitive advantages, that differentiation, the diversity of our revenue mix, the quality of the experience and people continue to come to the product like never before.

Got it. So ultimately, kind of while you guys are focusing on yourselves, we can only play the hand your dealt. And so a lot of it changes in the macro as well. Obviously, there's a huge focus in this conference on the state of the consumer, the health of the consumer and where that goes in '26.

Our proprietary surveys show that people, to your point, are prioritizing travel over almost anything else, like its growing share of the PC wallet. But at the same time, there's obviously noise out there. So from your push, what do you think the consumer looks like right now? And where do you think that goes in '26?

I think the consumer is fairly healthy, our consumer. We talk about this K-shaped economy. We're in the right part of the K, the upper tier. And that consumer base is strong. I mean, yes, you'll have the little blips along the way that we saw during the tariff issues earlier in the year or the shutdown. But even during those periods, premium was still doing great. International was strong.

Business travel was growing start of the year 10%, paused during the tariff, picked right back up to a 10% growth rate during the summer. Paused a little bit until the shutdown noise. And I expect going into next year, it's going to be back on trend. I've seen some of the surveys you guys do, which gives me a sense that I think that's what's going to happen.

You look at what's underlying that growth in wealth that the top end has, it's the health of the market in terms of equities and real estate are the things that are supporting them. And they're continuing to invest. And so I think you will have to ask yourself, do you feel the market is poised for another good year. Does real estate feel healthy? I think it does. And so as a result of that, we're going to have a great year being the top end of the premium stack in travel.

Got it. You just touched on that, but I'll give you a chance to elaborate a little bit more. I think the premiumization of the industry has been one of the underlying trends, which, again, we initially thought was pandemic-related, but now appears to be structural. Where do you see that going over the next several years? Do you think we are in the early innings of that, and there's a lot more room for that to grow? Do you think it's sustained at the current level going forward? Or like what gives you confidence that there's a pretty long kind of pipeline ahead?

Well, we have shown even during some of the turmoil of the last few years that, that premium quality experience that consumer for us is growing double digits, and there's various proof points of that. American Express, which is our largest, most important partner, we to them, them to us. That portfolio this year, as it has every year for the last 5 years is growing double digits. Even in the month of November, they were up another double digit.

We've added for the last 4 years running over 1 million new cardholders each year, and that trend line continues. You look at the -- what consumers want. They want the Delta One experiences. They want a better quality experience on board. So you look at who we've attached the brand to with Uber with a premium exclusive relationship. You look at Starbucks, you look at YouTube. These are all exclusive relationships that we've created where our brand sits in the center of -- that's why these brands are coming to us to draft off of our strength as well as American Express and us off of them.

So you have this ecosystem that is created and the power that we sit with air travel being and being the preferred provider in the midst of that continues to extend and expand our horizon, our pool of revenue sources and opportunities. So these are not commercial -- they are commercial relationships, but more important, they're strategic decisions that these brands are taking to affiliate with Delta. And that's what gives me confidence that this ecosystem is going to continue to grow and expand because we're building off of each other.

American Express this year will generate $8 billion of revenue this year. In 2019, that number was $4 billion. 5 years prior, it was $2 billion. And so you see the growth rate, and we've already publicly said that we expect in the next 2 to 3 years, that number is going to start to approach $10 billion. There's no sign that consumers want this. These are aspirations. These are valuable brands that they affiliate that they find personal gain being attached to. And that's why I think next year is going to be another great year.

Got it. I'm going to give you a chance to expand on this American Express relationship because, a, that's close to your heart; and b, it is the benchmark in the industry for loyalty program and co-brand relationships. How are you guys so tight? And how do you feed off each other, like both in terms of like consumer expectations and kind of giving leads to each other, but also how you build that relationship and the perks and everything else, right? So just talk about how that relationship has evolved and kind of where do you see that going?

It's interesting. Well, we've had a great relationship with them for over 30 years. But it's really in the last decade that the thing has taken the trajectory is a step function -- more than a step function change in terms of the improvements. There are a couple of things. In the early years of the relationship, we spent a lot of time trying to figure out whose consumer was it. Was it our consumer that we were selling credit card to? Was it their consumer that they're selling an air travel experience to?

And Steve Squeri, the CEO of Amex and myself, when he took on the reins about 7, 8 years ago, we said they're our consumers. It's a shared pool. It's not yours, it's not ours. We both benefit and we both share the experience. And that's informed the decisions in terms of how the teams operate. Prior to that point, there was a lot of negotiating what size of the pie you're getting. You're getting an outsized slice, I'm getting -- I'm not getting my share. The reality is we don't argue about that anymore. We talk about how do we grow the overall size of the pie.

And as a result, the shares grow together. And when you -- and while that sounds simple to say, it's hard to do. We have two very competitive organizations working together. But we have that alignment at the top -- that sends the teams working side-by-side cohesively into the marketplace. They are by far the premium credit card provider in our -- within the U.S. and particularly in our space because they not only have the card, they have the travel agency and their expansion into travel broadly is quite profound.

And looking at that strategy, American Express looks at it and says, hey, Delta is the #1 source of where I get my revenue from of any distribution channel they have. We've 10% of their overall worldwide billings are coming from us, and it's growing faster than any other channel they have, even though we are the largest. 30% of overall U.S. consumer spend for American Express is our card.

So when you look at that, the health of that relationship, what that tells you is that we are wed and we're going to continue to grow and expand on that. They need us, we need them. And the signal to the organizations are this is bigger than any individual part of the -- we got to continue to keep this momentum building.

Got it. That's really impressive. Maybe switching gears a little bit to corporate travel. We recently published a corporate travel survey. We do every year that shows momentum continuing to '26, mid-single-digit growth. In fact, expectations for airfare has actually stepped up sequentially for the first time in 3 years. So that's a pretty positive sign. No other airline caters to corporate customers as much as Delta does. So can you talk about, a, where that is in the recovery post pandemic? Do we have a definitive answer on the Zoom or no Zoom, kind of where does that go over time?

I think this room answers that, looking at the conference. People are coming to be in person. And I think the Zoom -- I mean, Zoom and hybrid work will be a new feature that will complement. It doesn't replace what we do, and it keeps people more connected, which is good for people wanting to be in person. Yes, I think business travel still has more to go. Pricing has been strong in that market in the last couple of years. But the volumes, I think, is where we still have opportunities.

The volumes are at or slightly under where we were in 2019. You look at how the economy has grown 25%, I guess, since 2019. So we know business travel is a function of the overall size of the economy. So there's probably, I'd say, maybe a 30% gap between volume of travel versus where we were in 2019 to where we are today. And I think we will continue to chip away at that.

I don't think we'll ever get that full 30% back, but I know we're going to continue to make progress. And in the meantime, pricing will stay strong because the supply base is also somewhat constrained within the industry. So our team won, as I think you know, recently -- Business Travel News, which is the #1 survey by all the corporate buyers and purchasers of travel, 15th year in a row, Delta has come in #1 and to show that we're not resting on our laurels, we came in #1 in all 11 categories.

So it's unquestioned in terms of what our team is doing to serve the business customer, but it's also unquestion what we're doing to serve the premium leisure customer, who is also extremely important to us.

Got it. So just to go back to your point of the 30% gap in 2019. Based on your conversations with your corporate customers, you're confident that the very vast majority of that is cyclical, not structural.

Yes. I don't -- I think it's a little bit of both. I think that gap will -- I don't know that, that gap will fully close because it's just grown and the pandemic was such a disruptive period of time. But I do think there's opportunities for growth that will be candidly, faster than what we've seen historically.

Got it. Some of your peers are looking to step up into the corporate space as well kind of -- do you feel like it's established relationships I mean, you kind of spoke about your partnership with Amex and kind of all the ecosystems you're building. Does it work the same way with the corporate customers as well that will make it harder for new entrants to break in to the corporate world?

Yes, absolutely. I mean these are people with decisions, and they're going to choose the best provider because the corporate manager wants to make sure that their travelers are being taken care of above anything else. Yes, they care about price. Yes, they care about discounts. But most importantly, they care about service. And Delta provides service better than any other -- and by the way, we're built for that. And that's the place we started 15 years ago saying, we've got to win in this marketplace. And Delta historically had not won that award for years.

And so when we started, anything you win 15 years in a row, at some point, you wonder whether that's just -- you take the pedal off the gas and you think, well, it's ours to lose. We don't feel it. We want more, and we continue to be hungry in terms of that service aspect. The gap we've seen this year is the greatest we've ever seen in terms of our share, over -- well over 30% of corporate travel comes on Delta, yet we only have a 20 -- a little over 20% share of seats in the market. And despite others saying that they're going for it, they're not -- certainly not taking it out of us. I don't know where they're getting it, but they're not getting it out of Delta.

Fair enough. Let's look ahead a little bit and talk about maybe some investments. Obviously, AI is going to be a big theme at the conference here. You guys were early in using it for route planning and operations. Can you just talk about how you're using AI through the organization today and kind of what benefits that might bring in the coming years?

Well, I think we're still learning. Obviously, I think everybody in corporate America is still learning what these tools can do and the reliability and the confidence you have. And I think it has great promise. I also think it has great hype. And we're all stepping our way through that. I see the greatest value for us is going to be around efficiency and process. You think about what Delta does. We are a highly technical business with difficult problems to solve with a lot of moving parts, fast-moving parts that are operating 24/7, 365. So I think it's a perfect model to say how can we outcome and deliver better outcomes, higher reliability, better efficiency for our people as well as our customers? How can you continue to improve the operating model using better intelligence and predictive capabilities and knowledge sets.

And we're working with some great providers of AI tools in the marketplace trying to sort that out, whether it's on the maintenance front, how can we clear and drive which is historically a very manually intensive, highly detailed process with -- that's largely change resistant and an FAA that certifies and governs it that is very change-resistant.

How do you bring AI to show them that you actually can drive better outcomes by making change in your maintenance staffing levels and the volume of work to where in the cycle it sits or it can be -- and we've talked about how do you improve the efficiency of pricing, not how we price, but just the efficiency, the speed with hundreds of millions of price points out there that we're selling at all times.

How do you get -- because machines have always operated. That's the only way you can operate. How can you get smarter machines to be more flexible, to be faster, to be raised price as well as lower price to meet consumers where they're at. And I'm excited about the opportunities that are out there. And you're going to see, I think, over the next couple of years, some significant proof points within our -- certainly our company, but I also think our industry that this is a tool for efficiency.

I haven't seen yet the tool to grow, which I think is the big question with AI broadly. It was where the growth is going to come from, but I can see it certainly driving better efficiencies.

Got it. That makes sense. Any questions from the audience?

And are there any indications from the administration that they would want to try and support some of your weak/ very weak competitors right now?

I don't see any indication that the government is inclined to do that now.

Yes. I have a question on the secret sauce that you have at Delta. And I happen to think the secret sauce is the people that work at Delta. And how do you create that, that others in the airline industry aspire to go to Delta to work. The people that are at Delta seem very positive today over the years that occurred because that wasn't always the case. And I choose an airline when I have a good experience with the people...

You're 100% right...

This training program, the follow-up that differentiates your people from others in the industry that they aspire to go there if they're not there. How did you do that?

Well, that is the secret sauce, and thank you. The credit goes to the people of the 100,000 team members of Delta that are out there every single day making it happen for people like you. And while in leadership, we talk about strategy and we talk about international and premiumization, all these big fancy words. At the end of the day, you want someone that's treating you right with a smile on your face, solving problems, having a positive attitude and helping you get you to where you need to be and with -- and improve the value of that experience along the way.

At Delta, we have -- we spend -- it's an all-in everyday effort. It's about explaining to people the alignment, why we're doing things the way we do. A tremendous amount of leadership involvement personally from me as well as all of our leadership team with our people. We take the -- our founder's wisdom, [indiscernible] 100 years ago, first airline, by the way, to reach 100 with Delta this year. He said, take care of your people first, and they will take care of your customers.

We're in a world where everything is about the customer. We're in a customer conference, right? It's a consumer conference. We should be at a people conference because it's the people that make the consumer experience, right? That's where you start. And I tell our folks that my job is really simple. I know I got a lot of stuff to do. My job is to take care of them. And the better job I and our senior leadership, Dan and Julie and all of our team take care of our frontline people, the trust they have, the confidence they have to go execute.

They know that I have their back, and they do what they do great. I can't fix the planes. I can't fly the planes. I don't get time to get to airports at times. What I can do is take care of them, get them what they need. I can listen. I don't have to be talking all the time. I have to be listening. My mom taught me early in life, you got two ears and one mouth, use them accordingly. We need, the world needs more listening and more care and more understanding. And when you create that experience and people really do believe that you're behind them, they see the strategy is working.

They understand that we want to continue to grow our profit share, and we share 15% of the profits of the company with our people. That's bigger than what we pay them, and it is bigger than all the rest of the airlines put together. They want to figure how do you grow your profit share in bigger. That's the #1 question you have on the financial side. They're not interested in debt and all this other stuff. How do we make our profit sharing bigger?

The perfect alignment with the shareholder and the customer and our community. And it's that flywheel that we have, it's been well developed for the last decade, and we just keep spinning that flywheel faster and faster. And that's why you have a Delta One lounge experience, and that's why you have 1,000 planes of free fast WiFi, and that's why you have people that are happy because we give them what they need. Easy to say, there's not a person that wouldn't say that that's the right strategy, but it takes commitment on a daily basis, 24/7. Execution, absolutely.

Any other questions from the audience?

You talked about the AI being as a tool to drive efficiency. I'm wondering if the AI tool will become available to your peers, your competitors and that who are less efficient right now and then eventually, they can close that gap over time with Delta. And how do you view that? And do you think it's a positive for the industry over wide? Or do you think closing the gap with Delta is more negative?

No, I think we all have upside. And I'm a firm believer that a healthier industry is a better industry, and Delta is a beneficiary of that as well as others. So I would encourage everyone, whatever tool is out there. We all understand there's -- these tools are pretty transparent.

We all understand we have some of the same issues, same opportunities that we'll learn together as an industry going forward. But I would say that while the technology is important, you still don't have the secret sauce, which is the people and how they take that tool and bring it to life for the customers. That is the equation.

It's not technology that's going to drive the answer here. It's service and it's experience. And that's why people pay a premium to be on Delta more than any other airline. No AI is going to figure that out. It's the people of the company.

Ed, you said earlier that you're going to generate $4 billion of free cash flow and kind of use that primarily to pay down debt, right? So obviously, the balance sheet has come a long way for yourself and the industry. Can you just talk about, again, free cash flow generation, capital use priorities over time?

Well, we laid out our financial road map last year. We said that we're going to grow our earnings 10% per year every year. This year, while we had some disruptions, were flat. Next year, I think it's going to be an outsized growth year to that point. And we said it's not going to be 10% every single year. Some will be less, some will be more. I think next year will be more. Free cash flow is really important to us, $3 billion to $5 billion of free cash flow each year.

This year, we're $4 billion. I expect we're certainly going to be in that $3 billion to $5 billion range next year and certainly the next number of years. Over the next couple of years, we will get our overall debt levels down to a point where we're effectively deleveraged. I mean we're not going to completely deleveraged, but when you get down to 1x your debt level at that point of time, that generates a tremendous amount of free cash flow opportunity.

We expect by the next 2 years, we'll get our net debt levels down to $10 billion or less. And at that point, there's going to be a tremendous amount of free cash capability for us to be able to increase -- and it's not just waiting 2 years. You're going to see us increase over time the ability to deploy that free cash to our shareholders in other ways. Right now, we have a dividend.

But over time, we'll find more uses to get directly. It's really a question of our valuation. And if our valuation continues to be lower than what we believe the inherent value of this enterprise and the cash that we're generating, we'll deploy it.

Got it. Just on that note, maybe to close this out, kind of what do you think investors are missing about the Delta story?

I think it's that point. It's that when you look -- I know many of our investors are split. Some think, yes, absolutely, continue to pay down that debt because that's the last bit of volatility. We believe in this business, you control what you can control. You manage what you control. There's always going to be noise. But if you focus on what you control and drown out the noise, taking good care of your people, keeping your financial health in order and growing your service levels and the experience of your customers, you're going to win. And we do that better than anyone.

What that will generate then is a balance sheet that's a fortress balance sheet that will eliminate that last bit of volatility. We talked about differentiation at the start. I think it's clear that we've created a differentiated product and experience that we're going to continue to gain ground on over time. And the second part is durability, financial durability, getting that debt level down to a point where we have no more call on that. We control our outcomes better than ever and what -- because there's always going to be volatility in this industry.

There's always going to be some level of risk that's hard to mitigate. It's really hard when you're overleveraged. And that's where the industry finds itself today. Delta will not be in that place. Delta arguably, and we already have our investment-grade rating back and continuing to improve ratings within the investment-grade stack.

Delta will be at a point today, I'd argue it already is better than it's ever been in terms of overall balance sheet management. But the next 2 years, if you look at where we're going to be, there's no question, I think that multiple is going to expand mightily as people start to see the reality of this cash flow, the power of this cash flow generation that Delta has.

Using the word fortress balance sheet in the context of an airline seemed unthinkable 5 years ago. So it just shows sort of how far the -- you guys have come in the industry has come in the last 5 years.

But that's the answer to how do we get the valuation that we deserve is get the balance sheet that people take that risk off the table and realize in good times and bad times, this is going to be the winning hand.

Absolutely. And with that, we are fresh out of time. Ed, I believe this is the last event of your centennial year, your last public event. So it has been great to see all the amazing things you guys have done from the special delivery to the celebrations to the merge and everything else. Congratulations. Look forward to another 100 years for you.

Well, thank you, Ravi. It's good being with you, and I thank you all, I know many of you are great Delta customers as well. We appreciate the opportunity to serve you all.

Thank you.

Good morning, everyone, and welcome to the Delta Airlines September Quarter 2025 Financial Results Conference Call. My name is Matthew, and I will be your coordinator. [Operator Instructions] As a reminder, today's call is being recorded. [Operator Instructions] I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations and Corporate Development. Please go ahead.

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 the 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 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 a 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 1/3 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 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 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 elevated experiences we provide across the entire travel journey is driving increased customer preference for flying Delta and underpins 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. Nonfuel unit cost growth was approximately flat to prior year, bringing the year-to-date nonfuel 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. This demonstrating the strength of our balance sheet and the attractiveness of Delta Credit.

Strong cash generation is able 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 nonfuel 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, enables 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.

[Operator Instructions] Your first question is coming from Duane Pfennigwerth from 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, I won't call it inefficiencies, but excess as we are 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.

Your next question is coming from Tom Fitzgerald from TD Cowen.

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 cohort 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.

Your next question is coming from Catie O'Brien from Goldman Sachs.

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.

Right. Certainly, as we continue to -- the premiumization, if you will, of the Delta ecosystem is really dependent on 2 things. One is the retrofits, which you mentioned, which accounts for probably about 25% to 30% of the incremental premium seats and then new aircraft deliveries that are continuing to come with a higher mix of premium as they roll out of the factory. So both those contributing to the continuation of improving the experience for our customers.

And then lastly, on Main Cabin demand, we have seen an inflection. Our Main Cabin seats are down slightly. They're not down significantly from last year. So relatively flat. But what we have seen is the rationalization of capacity in many of our hubs. As a matter of fact, if you look forward through November, capacity in almost all of our hubs is down year-over-year from competitive sets, which is allowing us to rationalize the seats that are there and continue to drive unit revenues up.

Your next question is coming from Jamie Baker from JPMorgan.

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, I think we've been outlining this for many years that we think that premium still has a long runway. And we -- as you know, following this industry for a long time, we were not selling premium seats 10 or 15 years ago. We were giving them away, and the reengineering of the whole purchase process where we made them much more affordable and much more attainable has allowed people to buy up into those categories, and we've always said that we aren't really at the end state in terms of getting the distribution systems where we need them to be to make sure that those products are being displayed to end consumers or agencies the way that they need to be, and that's been a long journey, too.

So yes, it's been a transformation. And yes, all of the above are true that people are attaching to these products and then the repeat rate on them is incredibly high. And I think in previous calls, I've equated it to the car that you drive today, is it better than the first car you had? The answer is probably yes, and you don't see many people going back to cars that are worse, and I think once people get used to traveling in a certain product, whether it's Comfort+, Delta Premium Select or Delta One, they tend not to go back. Their retention rates in the mid-80s. And so the intent to repurchase very high, continuing to expand the availability of the products, the price points on the products. And this is a journey, a long journey we're on. So I think it's a great question. And I think we see that there are many, many more opportunities in premium in the coming years.

Jamie, if I could add to that, a couple of things. There's also -- you need to look at the geographies, right? Look at the investment we've made in L.A. and Boston and New York and the coastal investment in Seattle, that's where a considerable amount of premium lives, and Delta historically wasn't as big in those markets as we are now, and not only have we moved in there, we've built generational experiences through the airports, the Delta One lounges.

Corporate travel is our bread and butter. We are the very best at it, very best serving it. Corporate travel is premium, right? And so all of these things go in, as you said in your question, there's a lot to that, but we see a considerable amount of continued momentum forward in premium, and the question we get from customers all the time is when can we get more?

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?.

What percentage of premium is corporate?

Yes.

It's probably 30% to 40%. We can get the exact number, more and more, and I think this is the exciting part for us. If you think about one of the issues we had many years back, the difference between yields on corporate and high-yield leisure were very, very different, and so it was a steep cliff if you weren't filling your planes with corporate on what you had to fill them with.

And now those have diverted. And in some cases, corporate -- personal leisure is higher than corporate these days. So it's given us a really nice ability to manage, and one of the issues we've had with our team that we've been working on is sometimes we run out of seats for corporate, and we have to go and put more seats in market because corporate was getting squeezed out by higher-yielding leisure.

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 2 next year?

I think you will.

Your next question is coming from Conor Cunningham from Melius Research.

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.

Maybe we can stick with the premium discussion because there still seems to be a fair underappreciation for what's going on here, I think, out there. So like obviously, the revenue growth on premium versus Main Cabin has been very, very strong for quite some time. But I was hoping you could talk about the profitability of the segments of the cabin.

I think that -- I mean, should we look at the gap in just in terms of the growth overall as a good benchmark for the differences in overall contribution? It just -- there seems to be another step function change coming on seat mix. So it just seems like there's a further step function change coming on profitability as well. So if you could just talk about the segments on a profitability standpoint, 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 Premiums like, 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.

Interesting. Great. Maybe on corporate, just a follow-up to Duane's question in general. I got a similar question as well. Like -- so I know that there's some CrowdStrike noise within it, but the 8% number is obviously a lot. And if you look at some of the other travel industries out there, they're not calling out a game like that. So to me, kind of it seems like you're driving additional share gains. Or maybe you could just talk about how the overall market is expanding in general and how you're continuing to drive share within it.

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 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 that's -- 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 is also -- was 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.

Awesome.

Up into this week are staying at or above the numbers we disclosed.

Your next question is coming from Andrew Didora from Bank of America.

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?

Well, yes, I think third quarter was clearly disappointing, and I think it was a host of things. Some of it might have been our fault in terms of where we thought the booking curves would be and how we held out for higher fares. And so next year, we're going to be much more aggressive in building a solid book earlier in the year.

I think the other thing was the booking, as Ed refers to it as the spring swoon. When the spring swoon was happening and everybody got a little nervous when tariffs were introduced, that was the booking window for the latter part of the summer. So that had some impact on Main Cabin as well. And then finally, I think we've discussed earlier is that given that the cohort on the premium products is really -- it's in their 60s, the fall has become a relatively more attractive period than the summer in terms of high-yield leisure. So it's a combination of all three.

So we're going to attack it multifaceted next year. I think we're going to hopefully not have any kind of swoon in the whole demand set. We're going to be a little bit more aggressive in terms of Main Cabin and filling up those cabins earlier in the booking curve, and then we're going to adjust our capacity to make sure that we're not creating the church for Easter Sunday in July and August. We're going to flatten that out more for the summer season to have a better distribution of capacity.

That's interesting. And then, Glenn, since you spoke about kind of margins within the cabin, curious if you'd be willing to rank your geographies by margin performance thus far in 2025 and maybe how you expect that to change, if at all, heading into 4Q and 2026?

Historically, we had a domestic premium and an international, and I'm not going to go beyond the international as a whole. But this year, they're relatively similar. They've converged on each other. And we're going to have a race. We've got our domestic for '26, our domestic improvement versus our international improvement, and we're going to compete them against each other and see which one can generate the higher returns next year.

Your next question is coming from Mike Linenberg from Deutsche Bank.

Glen, back to the government shutdown, if you sort of think back to 2018, 2019, when did it start to bite? I mean we're day 9 in? And what -- can you recall what that financial impact was to Delta?

We said at the time, it was a little bit less than -- it was about $1 million a day. And now it's less than $1 million a day for various reasons. One is that DCA travel was off even before. So DCA has not been a real driver in terms of revenue improvement this year. So less than $1 million a day now, and it was about $1 million a day previously.

Great. And then just a second quick one here. I thought it was interesting you called out Austin in your release. Clearly, non-hub flying historically, non-hub flying tended to be lower margin, RASM dilutive. What's changed? What makes the Delta product -- or maybe I'm answering the question, I'll leave it to you. Why is it different this time?

I think we used to look at the airline at a route level, but that wasn't really thinking about what's inside the minds of customers, and what makes customers choose Delta over a different carrier, and I think the answer is relevance, right? If we don't -- if we're not relevant, we cannot acquire the SkyMiles. We cannot acquire the frequent flyer, the credit cards, and so the ecosystem, you have to have relevance, and that's why it's important for us to have focus cities, and those focus cities have been quite profitable for us, sometimes exceeding that of the hubs, and so we're continuing to invest in focus cities.

We don't have a lot of them, but the ones we do have, we've chosen for specific reasons. And let's say, Austin, we've chosen because we don't have a Texas hub. Everybody else has a Texas hub except Delta. As you know, Texas is a -- in and of itself is a huge revenue market. So seeing those opportunities, looking at the demographics, looking at the GDP generation for these cities and saying where do we need to have a relevant offer so that people will join our SkyMiles program, they will join our -- and get our credit cards, and we can produce a relevance.

Your next question is coming from Sheila Kahyaoglu from Jefferies.

I want to maybe follow up on the Atlantic comments. So two questions there. How do we think about Atlantic capacity next year, Glen, you mentioned more evenly dispersed. I guess how are you thinking about that? And maybe secondly, given your competitor just announced some new additions, how are you thinking about competitive capacity, your own network planning as well as the A330, 350 product?

Well, I think our product is best-in-class in the transatlantic. We continue to monitor our relative performance in terms of Net Promoter Scores. And I think it's got -- it's leading right now, and it's going to get much better as we continue to deliver new airplanes with the Delta One suites and with the enhanced Delta Premium Select and larger Delta C+ cabins. So I'm really excited about the product that we're putting in market.

We've chosen not to fly narrow-bodies in the transatlantic because of product and brand issues, and so we're not going to go in that direction, and -- but next year's capacity, I don't know. I mean I think it's early in the game. Not everybody has announced what they're going to fly, and usually, everybody announces what they're going to fly, not what they're not going to fly, and so that usually follows after what we're going to fly next year.

So we'll see how it all shakes out. I think it's going to be probably low single digits, and as far as our summer, we'll be probably in the very, very low single digits if growth at all in the very peak months of July and August, with a slightly higher shoulder season, which is becoming more peaky.

Your next question is coming from Savi Syth from Raymond James.

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.

That's helpful. And if I might, on the maintenance side, Dan, do you expect 2026 to be kind of above or below in terms of heavy maintenance events? And setting that aside, like what are you seeing in terms of inflation on maintenance and parts? Is that getting better?

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 -- we're in the early stages of our planning for 2026. So we haven't worked through all our capacity and maintenance. So more to come on that as we work through the fall here. As it relates to inflation, yes, I think that's still one part of the supply chain, both as it relates to material availability, to repair, components, all those have had inflation above the normal.

They're coming more in line as the industry continues to get better, but it's got a long ways to go. We've kind of said that, that part of the supply chain is multiyear in nature as it relates to the opportunities in front of it to any aspect of it, you can look at. The turn times and performance are still not at levels that we experienced in that '17, '18, '19 perspective. And as those come more in line and get healthier, you're going to see greater efficiency out of that.

Your next question is coming from Scott Group from Wolfe Research.

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. Fourth quarter, it's actually at or slightly better than third quarter, and I think it's being driven by strong premium demands and corporate travel in season. So we have a nice long season. If you remember, last year, we had the election, and in the October period, we had -- the country kind of froze right before the election and unlocked a little bit after the election, but we had that period.

We also have some favorability in terms of the calendar. So I think fourth quarter is as long as business is traveling is a very strong quarter for us, and I think in third quarter, particularly in the transatlantic, we are going to strive to do better than next year's third quarter because we think we have some opportunity should we -- if we had to replay that to improve our results on the margin.

Okay. So maybe some of both. And then about 1 point of the revenue growth in Q3 was from MRO, maybe a little help from cargo. Is that sort of sustainable into Q4 and going forward that MRO strength?

The MRO over the long term, yes, you're going to see it. You won't see it every quarter at 60% plus. I'd say both the second and third quarter were quite strong as it related to MRO for the year, think of it more in that 20% to 30% range, but we would like to see many years of MRO growth well above the growth of the core airline and being double digit. But you won't see it at those levels. You'll see much -- actually, I think as you -- fourth quarter, it's probably closer to flat year-over-year.

And on cargo, great third quarter and a shout out to our cargo team. I think they did a fabulous job. We have seen some, I'd say, choppiness as we enter the fourth quarter, and we'll see how that -- what the final result is. But I wouldn't expect that the 19% would be sustainable into 4Q. It's probably going to come down from there. And we'll see, but still probably growth in cargo.

Your next question is coming from Ravi Shanker from Morgan Stanley.

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.

Understood. And just kind of on that topic of 1Q and kind of focusing on transatlantic, you guys have been talking about that shoulder season strength for some time now clearly manifesting right now. Last year in December, you said that 1Q of '25 in transatlantic was setting up for one of the strongest years you've ever seen. And part of that was driven by a favorable U.S. dollar. The dollar is not as favorable right now. But are you -- from what you can see right now, do you see European strength continuing into 1Q '26 similar to what you saw coming into this year?

Yes.

Your next question is coming from Brandon Oglenski from Barclays.

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.

Yes. No, I think I'd point you back, and thanks for the question to a lot that we talked about last November. There were a lot of things in there that we talked about that were Delta specific as it related to things that are in our control as we look forward, and we want to drive -- we run the company for margins.

We want to drive margins up into the mid-teens as we laid out, and we feel that the playbook and the strategies and priorities in front of us enable us to do that. It starts with those growing the high-margin revenue streams faster than the core. Premium is at the core of that. We talked about premium seats growing, Main Cabin -- outpacing Main Cabin. So you have more product out there, continue to grow the Amex relationship and loyalty faster.

So those are things that help you as it relates to the top line. The fleet renewal supports that. And then you look at the things that we want to do that and still drive good cost performance of low single digit, and again, it goes back to the growing into the airports that are already in our run rate. It goes into the fleet actions that we've been growing of simplifying the fleet and getting scale out of it associated with it.

And then long term, continue to grow and get more efficiency out of not only our workforce, but the entire supply base, but also the benefits that technology bring to it. So we want a steady march over time of doing that. Now certainly, the industry backdrop could be beneficial to that supply and demand stay in balance, there's real opportunity for that also to support additional margin growth in excess of the things that are Delta-specific and controlled.

And just maybe as a really quick follow-up. I think you guys said co-brand spend was up 12%. I might be off on that, but can you talk to some of the loyalty drivers right now and how sustainable that is looking into next year?

Well, I think it's been driven by two things. One is the premiumization of the card itself. So we've been acquiring a record number of premium card holders and their spend is a multiple of what our base member card spend is. So while you look at the total acquisition numbers and say, I think this is our seventh year of 1 million or more acquisitions, that the mix of those acquisitions is skewing higher and higher in terms of getting -- reaching a more premium audience.

And those customers have better credit scores, so they get approved more often and they spend more on their cards. So that's been really one of the key drivers for us is not only in the total volume, but the number of premium cards that we've been able to acquire. And that's driven versus the -- our 2x versus growth versus total card spend. And that's been year after year that we've been able to do that and looking to continue to do that through '26.

And as the more attractive and the more -- if you think about the question that was preceded about why Austin or why Raleigh, well, these are high-income growth areas. These are places that we've acquired a lot of cards in and trying to understand the interaction between the airline and the card and how to maximize both of those together as opposed to just looking at an individual route.

Your next question is coming from Tom Wadewitz from UBS.

Wanted to see if you could give maybe a little bit of additional sense of the -- looking at '26, you're saying that you'll be in line with the multiyear view, so let's say, 10% earnings growth, something like that. Do you assume that you get to revenue growth, low single-digit revenue growth, some kind of revenue growth in Main Cabin? Or should we think about this where you really get there with the good visibility you have on the premium and card and other things and that you kind of get to that multiyear growth without a meaningful swing up in Main Cabin.

Well, I think we've already seen an inflection in Main Cabin, which is very exciting to us. And the trends that we see today are probably the trends that are going to carry us at least through the beginning part of 2026. So I would expect that Main Cabin does have improvement as part of our base -- as part of our base revenue assumptions for '26. And on top of that, the continued growth of the premium products and the card spend as well. So yes, I'm excited about the fact that we have finally inflected in the Main Cabin.

Okay. But you wouldn't necessarily see that as upside that's kind of assumed within getting to what the multiyear is?

We haven't given any guidance on that yet. So...

Okay. I appreciate that. That's fair enough. The improvement in Main Cabin, do you think that, that's like -- I think the consumer and especially kind of lower-end consumer is -- it's unclear whether -- how optimistic you should be. So do you think that what you've seen in the sales trend that's been favorable is that consumer slime? Or do you think it's just Delta share and kind of industry capacity rationalization that's been beneficial? Or what do you think the kind of bigger driver would be of that improvement you see in 4Q and carrying into '26?

At the low end of the industry, there's been a lot of seats removed, and that's allowed us to get a footing on fares. I think when you think about the financial performance of the carriers that are catering to the lower income customers, they have not been good, and some have had to declare bankruptcy. And it's the restructurings that they're going through and having to get higher fares.

They can't -- they need more money to survive. And so we had one of our competitors say something, but it's just math. Well, it is just math is that they have to get their fares higher in terms of -- and that helps us get a footing on our Main Cabin as well.

Matthew, we'll now go to our final analyst question.

Certainly. Your last question is coming from David Vernon from Bernstein.

So Glen, maybe just a micro question for you in terms of the competitive capacity being down in Delta hubs year-over-year. I'm wondering if you're seeing any kind of difference in domestic revenue trends in your hubs versus some of the point-to-point leisure markets. I'm trying to get a lot of questions about whether kind of what you're seeing in Main Cabin is going to be an industry-wide thing or more of a Delta-specific thing.

Well we have 3 categories. We have coastal gateways. We have core hubs and then we have focus cities, and they've all been behaving well. I'd say the biggest improvements have been in the coastal cities where we've seen a big uptick, and these are also the biggest and wealthiest cities in the country, the New York, the L.A., the Boston, Seattle, where corporate travel is significantly improving year-over-year and our share is improving. So that's really been a driver -- a big driver of it, and the hubs have been performing very, very well, and our focus cities, the ones that we're investing in are as expected. So yes, I think it's a broad brush improvement from where we were just 90 days ago.

Excellent. And then maybe just if we kind of step back for a second, coming back to the commentary around earnings consistent with the long-term financial framework. Given the weakness and the weirdness of, frankly, of 2025 with the second quarter slowdown, some of the regular ops days, I mean if we don't have something like that repeat, is there any reason to think that we shouldn't be at the upper end of the framework you guys have laid out in the past?

I'm just thinking just the comps are just going to be so much easier for a big part of next year that maybe we shouldn't be thinking that, I'm wondering if there's a reason we shouldn't be thinking it would be at the higher end of your longer-term financial framework.

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.

All right, Matthew, that will wrap up the analyst portion of the call. I'll now turn it over to Tim Mapes to start the media questions.

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.

[Operator Instructions] Your first question is coming from Leslie Josephs.

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 time of booking.

Your next question is coming from Mary Schlangenstein from Bloomberg News.

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.

And what are some of the other factors that are ongoing that you see constricting non-U.S. point of sale? Is it still some of the like concerns over immigration policies, things like that?

There's clearly safety concerns. There's a whole host of concerns of travel to the U.S. But I think we still have a great product here, and we have great cities, and we have people with relatives and friends and family. And so it's going to be -- there's going to be demand. The question is how much demand. And the good news for us is we're not totally dependent on that. It's not our core business. But I would expect, hopefully, that next year is a little bit better than this year for European point of sale. For nothing else is that the appreciation of the euro has made European fares look relatively more attractive.

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.

Gratulations. Matthew, let's squeeze one more in, please.

Your last question is coming from Niraj Chokshi from New York Times.

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.

Matthew, that will wrap us up, please.

Certainly. Ladies and gentlemen, that concludes today's conference. Thank you for your participation today.

Great. So kicking off the airlines content for today, we are very happy to welcome back to Laguna Delta Airlines and friends of Laguna, Glen Hauenstein, President; Dan Janki, EVP and CFO; and Julie Stewart, VP of IR and Corporate Development team. Thanks so much for being here. Julie, over to you.

Yes. So I'll just do a quick disclaimer here. Just as a reminder, today's presentation contains forward-looking statements that represent our expectations about future events. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.

Factors that may cause those differences can be found in our SEC filings. So Ravi, thank you for having us. This is always one of the highlights of the year. And to get us started, now I'll hand it over to Glen for a couple of remarks.

Perfect.

Ravi, thanks again for having us. What a nice conference. And I hear it's record attendance?

It is, yes.

And I think record attendance means probably more people flew here on business.

We try our best to make that.So we like that.

Yes. We like that. And just maybe start with the current environment that's kind of in line with what we're seeing. We're seeing very strong domestic corporate demand into the fall, which we're very excited about.

We actually had our highest post-pandemic corporate sales number for any day and any week in the September. So looking like the fall is going to be quite solid in terms of the booking demand for corporate as well as high-yield leisure. Both of those segments are doing incredibly well.

A little bit of backing up now into the summer and what this quarter is about and how we see the fourth quarter maybe coming into focus is that domestic inflected into positive territory early in the quarter, which was great. And we see that continuing to happen through the end of the year. So we can put probably a checkmark in that, that we've seen the industry rationalize its capacity. We've seen -- and then we see the corresponding increases in demand that you see in the TSA numbers, and we've seen a lot more pricing power as we head into the fall. So that's a great environment for us to be in domestically.

Internationally, I think we've got a couple of different things going on. We have noticed over the past few years, and I think we've talked about it in other conferences and calls is that July and August have not been the peak months that they once were in terms of high-end leisure into Europe. And so that's an opportunity for us as well as a challenge for this year. It was our worst performing entity in the third quarter, although very profitable still.

But we were always creating that church for Easter Sunday for June, July, August and putting all we had in terms of the widebodies out into the marketplace for those peak months. So this allows us, as we move forward to spread that out a little bit more. As you think about it, October has become actually a peak month, and we're heading in a transition from where August is less peaky to October being peaky. So you see a big sequential improvement in transatlantic, as you move out of the summer and into the shoulder -- what's historically been the shoulder season.

So opportunity for us to, again, tailor capacity to demand in future summer schedule seasons. And so we're excited about that. We're a bit disappointed in terms of the transatlantic results. But even digging a little bit further into those, it was all in main cabin. Premium products across the board are continuing to perform. So within every entity, premium is leading in terms of unit revenues.

Loyalty, amazing story continues with our loyalty program. This will be a record remuneration year for us. And we have spend up double digits in the quarter and with August being the strongest month within the quarter. So we see our cohort, which tends to be at the upper end, really in a strong financial position as we move into the fall.

And then just optimistic about the improving trends across the other international entities. I think Latin and Pacific have been less challenged than the transatlantic through the summer, and we see that continuing to build into the fall. So shifting our gears from summer now in the rearview mirror and looking at fall, we're really optimistic, and we're very encouraged about all the signs we're seeing that the industry is moving -- continuing to move in the right direction. Capacity rationalization domestically has occurred, and we see trends improving as we head out of the summer.

Got it. That is a very helpful update, and you guys put out an update this morning as well. So I have lots of follow-ups for you. But I did want to start with a few high-level questions, so just to kind of set the stage. Maybe Dan, I'll start with you, right? It's...

Well, I think Dan had some comments.

Go sir.

Well, I'll add some absolutely on that. No, I share Glen's view on the constructive nature of the industry and what we're seeing commercially from demand and from a supply perspective. When you step back and look at us operationally and financially, we continue to lead the industry.

And the operational performance of the team year-to-date, I want to thank the Delta team for that performance and leading our network peers related to that. And that's through a pretty challenging environment. And if you've looked at third quarter on the operating stats, they continue to extend that leadership position with that. So we've continued to make that investment. That's a brand promise for us in that operational performance.

With that, we do see in the third quarter that our nonfuel costs will be flat to slightly up versus flat to down that we initially guided. We're on track for the year of low single digit. And I think that's an important anchor as you continue to see that performance that we committed to at the beginning of the year, even with the capacity reductions in the back half of the year.

Financially, we're on track for the third quarter and total year earnings. And that's underpinned by a franchise that's delivering double-digit margins, double-digit returns and will generate free cash flow of $3 billion to $4 billion within the long-term framework that we laid out. So I think it's a year as I talked about really that it's unfolded differently than what we thought, but it's really demonstrated Delta's differentiation and durability.

So in a year where the industry is going to be down significantly on earnings, we're going to be right around that $5 billion mark with that. That's pretty much on par with last year. And we're going to continue that investment back in the business. So capital allocation, focused on reinvesting back into the franchise to strengthen those competitive positions, continue to focus on our #1 priority of strengthening the investment-grade balance sheet, paying down debt.

It was nice again this quarter to see another marker fitch out, taking us from stable to positive, another sign that us continue to make progress on that and differentiating that way. So overall, a different year, but a very good year for us.

Got it. So maybe I'll just follow up right there then. So obviously, you guys took your revenue guide up to the high end of the range, but you left your EPS unchanged. Kind of is that cost change there, the reason why? Or can you just walk us down the same?

No, I think we wanted -- we knew that in this environment that the real focus is on the inflection on the demand side. So we wanted to make sure that we are clear on what we were seeing on that. That's the rationale in regards around adjusting that number. We wanted to be really clear with regards to the trends that we are seeing.

Got it. Sounds good. So maybe kind of exactly to your point, the focus like virtually all my incoming from investors has been on the demand side and where are we going here and then the state of the consumer, right? And it has been a very strange year for the consumer this year. So kind of -- so you gave us all of the symptoms, if you will, or the evidence you're seeing. But if you just kind of went back to the root here, what do you think the state of the consumer looks like right now relative to what we saw in the beginning of the year?

The consumer is steadily improving. It was one of those years where they started with a lot of confidence. We saw the step back in late spring, and you saw that erosion in both consumer and corporate confidence. You saw that translate into TSA volumes going from positive to negative 1% in the May, June time frame.

And then you've seen the steady improvement in both the consumer and the corporate confidence as we've moved through the mid-summer and into the fall. And as Glen talked about, the outlook as we see it in the fourth quarter. And you're seeing that in TSA volumes that have inflected to now 1% to 2% in the underpinning. And we also feel good about the delta consumer.

I think that's the difference is, there's a lot of consternation, I think, at the bottom end for consumer who's lost income relative to inflation, has lost income in terms of as student loans come on, as interest rates reset and they've been under a lot of stress. And I think you've seen that manifest itself in the airline business that the companies that cater to that cohort are not doing as well as the companies that cater to a higher income bracket.

And we're at the very top, we believe, of the income brackets. Our average consumer is well over $100,000 a year. So we're at the top end, and that seems to be good. And I think one of the biggest indications we have of how strong that is, is continuing to break records in terms of card spend.

Got it. Which is actually a great segue to my next question, which is like one of the biggest debates in the space since the pandemic is whether this time is really different with a bunch of the trends you've seen so far, right? So -- and you just spoke about this difference between the Delta consumer and the broader consumer. So for airlines, what in your view, 5 years removed from the pandemic is unequivocally structurally different versus what is still in debate.

Why don't you start first? I'm in the decade plus here.

I think what's incredible is how we've been able to diversify our revenue streams and not be reliant on the coach products. And this really goes probably even before pre-pandemic because we were on that path before, but it accelerated through the pandemic.

And now with well over 50% of our revenue is not tied to the main cabin, tied to premium products and services, ancillary revenues, card spend. So we've got a diverse revenue stream now that we never had. And I'm speaking for Delta here, not the industry. And I think that served us well. I think we've wanted to create something that's differentiated and durable, and we've worked very hard on reengineering the entire company to be focused on that. And I think it's delivering. I think it's unequivocally delivering.

And we're able to get through what I consider to be a challenging period where industry capacity was up and TSA employments were down, really with still excellent profit numbers. So I think that's differentiated, that's durable and that is really a proof point of all the work we've done to try and reengineer the way airlines sell tickets.

Got it.

Dan, did you want to...

No, I think that's well said. And I think you saw a lot of the themes when we talked last November at our Investor Day, right? Yes, it's -- I mean, as Glen said about the last 5 years, but it's really the last 10 to 15 years of the strategy and that consistent investment and execution for that period of time that has differentiated Delta.

Got it. So the next step of that is what does this mean for the industry? And kind of does the industry look materially different 10, 15 years from now than it does today, right? So in your view, if you just extrapolate these trends to their natural destination, what does this industry look like in 10 or 15 years? And not necessarily kind of share shift through consolidation, but share shift through attrition or just share changes kind of do we see the same structure that we have right now?

Well, it's hard to believe over the long term, if you're not producing your cost of capital that you can sustain. And I think we've seen that in -- particularly right now, it's pronounced in the bottom end that's very dependent on main cabin. And so I think you're watching in real time a change. I think if you forward back to -- these were carriers that were growing quite quickly and they were marginally profitable and now unable to sustain that.

And then I think the question is, well, do people backfill that capacity? And I would suggest to you that if it's not working at their cost structure, it's not going to work at anybody's cost structure. So a lot of this will probably be out for a prolonged period of time. And so I think that it's changing. It will continue to change.

Do I have a crystal ball where I know what's exactly going to look like? No. I do know that those carriers that are not earning their cost of capital and have not earned it for years and years and years are going to be much more challenged moving forward than those that are.

Understood. So maybe I'll just shift to current trends and kind of maybe follow up on your opening remarks here. So can you just give us a little bit more of a detailed color on what you're seeing, especially in domestic cabin because that's been the big focus area all year, especially the forward booking curve that you're seeing through holiday season kind of what does that look like from...

Well, again, now that we're less reliant on Main Cabin, we don't need Main Cabin to be positive to post positive returns. And indeed, that's what we're seeing now. Main Cabin is still negative. And it's being driven by the premium products and services in the market. There is overcoming the small negative numbers in the Main Cabin.

I say that because I think it's huge upside. At some point, that has to rationalize. And so that's still to come on our forward-looking view is there will be rationalization of main cabin capacity. You're seeing that real time. I believe it has to continue, and that should, over time, improve Main Cabin results. And so if you can put that together with the continuing acceleration of premium, you get a very nice future that we're very excited about.

Got it. Moving to corporate. I think earlier this year, you described corporate travel as choppy. Your update like a few minutes ago, not much better than that. So what do you think is driving that transition? Kind of is there particular end markets? Where -- what -- innings question, but what innings are we in that corporate recovery?

I think you're seeing the strength in the segments that we've talked about banking, financial service, technology leading the way. Still choppy in areas like industrials, manufacturing, those areas, but there's real momentum and strength there. And you're seeing on both volume and yield. So very constructive in moving forward and quite optimistic about it as we move into the fall here.

And this is both domestic and international on the corporate side?

I'd say it's more domestic than it is international. International is positive, but it's not as robust as domestic.

Got it. And you guys do these kind of industry standard kind of corporate surveys, which I don't know if you do before the earnings call, but what are these corporates telling you? Are they telling you they're actually optimistic about the future, which would be a slightly different message than what you've heard Laguna yesterday. But kind of -- does it feel like this is sustainable kind of going into '26? Or is it still pretty choppy?

I think one of the things you have to recognize is we're still not back to corporate at pre-pandemic levels. So everything else is far ahead in that space. But it warms my heart to know that this is a record attendance at conferences like this. People are back in the office. The company -- the country is open for business. And I think a lot of the hesitation that occurred when tariffs were first introduced is starting to unwind.

And so I think we could see a very, very solid performance moving forward and into '26. And our corporates are always telling us they're going to spend more. It's that how much are they going to spend, and it's near all-time record highs. We'll see in this next survey, but the previous survey was near an all-time record high in terms of people who thought they were going to spend more moving forward.

Got it. Hopefully, you guys started to call out the Laguna conference as a positive seasonality event on your 3Q calls.

Absolutely.

So maybe shifting gears a little bit and talking about premium. Premium revenues have outpaced main cabin revenues, as you pointed out, kind of ever since the pandemic. How is that trending? Are you starting to see maybe some diminishing returns there? And kind of what do you think that looks like at the end of the year?

We are not seeing diminishing returns there. As a matter of fact, we are increasing the percentage of seats that we have. So next year will be a record number of premium seats in '26. And actually, Main Cabin domestic will be flat to slightly down. So we're continuing to invest there. We're -- every one of the returns is continuing to accelerate. And so we see no stopping of that.

And as you think of ways people can get there in different combinations, whether or not it's your corporation, and I'm very excited that Concur, for example, finally has put the premium products on display to the agencies. It's a pretty new occurrence we've been working with them for years on. And as soon as those products are displayed in the right way, we see a 30-point increase in their consumption.

So I think we've talked about opening the aperture over time to make premium products more accessible. And I think we've done a great job, but we're still, I'd say, in the mid-innings of making sure that the whole industry is focused on displaying what exactly the product is, which is very different than the way we started, which was a commodity grid.

Yes. Got it. So obviously, you pointed out that, that main cabin still is somewhat weak. Premium is very strong. The big kind of thesis for Delta is you're kind of upgrading people, not upgrading, but getting people to move up the cabin, right? Does this kind of stall that a little bit? Or does it actually accelerate because the people who can jump from the back are making that lead? How do we think about the shift in trends between the front and the back of the plane?

Well, I'd say we're not done making premium products more accessible. And this fall, we'll be announcing tests of different products and services, so that we can ascribe value to fare paid. And I think if you go back in the industry 20 years ago, the problem with it was that there was no -- you paid a higher fare and you got no value, right? So when you were going to a cocktail party 20 years ago, you would say, how much did you pay to go to Florida this year, people would say $79, and they'd be proud of it.

And I think that's because the industry didn't put value in paying more than $79. And you've seen those conversations shift to I fly Delta and I fly these classes of service. And as we continue to bring more classes of service, more ways to get there, this is an evolution. And it's going to -- it's taken -- we're mid-innings in this, and we have a lot to go to continue to provide value to customers for higher fares.

I think that's allowing in the demographics also, right? They're engaging earlier in the loyalty programs, engaging earlier with Amex and the card that's skewing younger in certain elements, and that's providing the fuel for that product.

Got it. That was literally my next question, which is premium is not just on the plane itself. It's also kind of on the way to the plane and off the plane. So is that business somewhat countercyclical even? And kind of what are the trends you're seeing with loyalty, with co-brand with kind of demand for some of the other sort of non-aircraft premium services?

Well, I think what's interesting in our own loyalty program in terms of card acquisitions, we've seen a really robust demand for the premium cards, similar to the airline. The more premium it is, the more consumers seem to want it. And so we've had really great successes with our high-end cards and working now to reengineer or inject value into the lower-end cards so that people can life cycle through those. But right now, most of the acquisitions in terms of the spend are coming at the very top end.

Got it. Moving to capacity. So you like the rest of the industry, obviously have adjusted your capacity for the back half of the year. I don't think you're quite done with fourth quarter just yet. So can you just talk about kind of the changes you've made so far, what you're looking ahead to and kind of what might potentially happen for the fourth quarter?

I think we -- in the back half, we've talked about it, we've adjusted capacity where the weakness in demand has been. So it's in the off-peak, it's in the shoulder periods. And where we can in main cabin, we've made those adjustments.

For 2026, it's still early. We're in the planning process, but the planning philosophy is always to ensure that capacity is aligned with demand and the demand set and ensure that, that's aligned.

Yes. I would just say usually, 1Q looks a lot like 4Q.

Well, let's hope this 4Q doesn't look like 1Q. But are you happy with what you're seeing from the industry so far? Or do you think others still need to?

I think that's really a question for the capital markets. Do they really want to continue to invest in carriers that can't return their cost of capital. And at some point, if you can't do it, as difficult as it is to get rid of airplanes and get rid of people, if you can't justify retaining them, you have to get rid of them.

I mean we've said it earlier when you talked about the structure of the industry, right, you got the industry not earning its cost of capital, right? You've got 2 carriers that are making over 100% of the industry profit, and they're the only 2 that are above their cost of capital. We're fortunate that Delta have double-digit return on capital. But I think the one thing that you go back to in time is always you have to have that supply in line with demand, and that's the only way to improve that return on capital.

Got it. Again, I want to go back to your comments on Europe and the changing seasonality there. I think you alluded to this on your 2Q call as well, where you talked about less peaky peaks and kind of the shoulder periods kind of taking up some of that slack. What does this mean for long-term planning? Like you said, kind of it does smooth it out and kind of make it easier for demand peaks as well.

How do we think about international profitability between the summer and the fall, not necessarily for this year, but just kind of going forward, kind of given the dynamic?

Well, summer -- peak summer has become less profitable relatively and spring and fall have become more profitable. That's airline networks planners dream that the seasons last longer and then you can rotate the airplanes easier and that you don't have to create that peak of peak for Easter Sunday because a lot of those costs you carry for the whole year.

So the number of pilots that you have in any particular fleet is usually driven by the number of hours we're going to fly in July because that's the peak of the peak or historically it has been. And our ability to now smooth that out should give us better pilot utilization, for example, on a year-round basis. And so that's the part -- this isn't by design. This is by the way consumers are reacting to the realities of what they see. But it's a benefit, I think, medium and long term to airlines.

Got it. So just to confirm the net impact of the less profitable peak and the more profitable...

Better economics overall.

So it's a net positive coming out of that. Got it. And just kind of tapping on all your years of experience, why is this an international-only thing? Is it just because like Europe is fun in the fall? Kind of why is this not showing up in domestic?

Well, I think they're very different consumers, right? I think there's a lot of things that go on in August. First of all, in Europe, there is no business component in August, for example. You're competing for the hotels with the Europeans that are also off. And so the rates are much higher. And so that discourages some travel. So I think there's many factors in play here. But I think the net-net is that this is an interesting new development in the way we think about scheduling the transatlantic in particular.

Got it. Before I move on, any questions from the audience?

Can you talk a little bit about the kind of change in the consumer and the demographics that you guys are catering towards? I know you've had a lot more technology and you have like a younger consumer, probably with a bigger wallet share. So just maybe some of the changes you've been seeing in that space and premium in general, like what you're doing to attract a younger, more like tech-focused client?

I think we are always looking to attract a younger cohort. And we have a lot of programs in place that are specifically designed for that and trying to understand the life cycle of a consumer. And usually, they don't start in the premium products, they start in coach. And I think that's why it's very important for us to make sure that we have best-in-class products and services across the whole spectrum, not just at the top end because we need you to fly us when you're young and that money is much more important and harder to come by that we have the best products and services and fly to where you want to fly.

You enroll in our programs. The average age for a Delta One customer is 61. So when you think about how long it takes from when I start flying with Delta to when I'm actually buying those most premium products, there's a 30-, 40-year cycle in there that you have to have value all across that spectrum and continuing to make sure that we're doing relevant things.

And I think things like the Uber partnerships, I think those Starbucks partnerships, things that you can use these SkyMiles every day in transactions and other brands that you love and putting that together to have a comprehensive everyday experience.

I think you add that those partnerships with the technology experience that you referenced, right? The onboard experience with free WiFi, the interactive nature of it, when you start putting that together, you see that, that draws the younger consumer in. And the -- the joining of Sky members -- SkyMiles members is younger as it relates to one signing up with free WiFi and you're engaging them differently and earlier.

Got it. Then do you have that age 61 stat what it was before the pandemic?

It's probably even older.

Yes.

Coming down. Coming down.

Any more questions.

I had a quick question. On Main Cabin, did your guidance or forward guidance for next year, do you contemplate much of an improvement in Main Cabin or the trends that you're seeing in Main Cabin are as you expected and what we can assume was in the guidance?

When we talked last November, when we were out from -- in our investor framework, we talked a lot about the things that Delta controls, right? The opportunities that we have in front of us as it relates to growing earnings over time. And a lot of that comes from the high-value, high-margin revenue activity that Glen talked about, talks about the items that we have to drive efficiency from our infrastructure from new aircraft to the airport leverage that we get along with technology.

And those are things that are in our control. And we believe we can drive those forward both for margin growth and earnings growth for the airline. And then we've always said that if Main cabin were to improve, that would only be in addition to that.

Any more questions? Maybe kind of piggybacking off of that. So obviously, today, you pointed to the high end of your revenue range for the quarter. When you think of your full year EPS guide, kind of what are some of the puts and takes that you think get you to the high versus the low end of that range?

I think on the high end, you'd have to say that you'd have to see acceleration from demand from where we sit today. That is really the real leverage point.

Got it. And obviously, it's opposite to the low end?

Yes.

Understood. Obviously, you guys have done a great job of generating free cash flow, $3 billion to $4 billion for 2025. Can you just remind us again what the capital allocation priorities are? Obviously, you guys are very opportunistic with launching a buyback earlier this year when the sector was setting off. So how do you think about tactically allocating capital between the different uses?

Yes. Delta has got a long history in regards to the discipline and focus around capital allocation. Half of operating cash flow goes right back into reinvesting in the company, in the business around the key strategic priorities that we lay out and the consistency of that strategy, investing in the brand, the aircraft, the airports. et cetera. And that sets the foundation.

So that's -- then with the free cash flow, the #1 priority is strengthening the financial foundation through paying down debt. And you've seen us continuously every year chip away at that. We'll continue to do that, taking our gross debt down to the low teens, and we believe leverage at 1x. And we feel over the next few years, we'll accomplish that. And then we've always had a track record of consistently returning capital to shareholders.

We started that through the dividend a couple of years ago. We continue to grow that, and you'll continue to see that as we go forward, maintaining that yield in line with the S&P 500.

Got it. Just kind of going back to the earlier comments on how you were saying that it's not sustainable for airlines to not earn their cost of capital anymore. So it does feel like there's going to be this perpetual squeeze at the bad end of the industry, if you will. What does that mean for Delta, right? If that's -- if you just go to constantly keep seeing a squeeze at the low end, how does that translate into better returns for you guys? And maybe kind of -- maybe this is a margin question, right? So where do you see your margins going long term?

I think in the long term, all the sectors have to produce returns. And right now, you have the high end producing returns and you have the main cabin really essentially not producing returns that are acceptable. And so that's got to right itself over time, which is, I think, the upside to our margin is that when all cabins are producing similar returns, you have a much more robust structure than we do today. And that allows the bottom end, I think, to create value and profitability.

So how do you get there from here? It's never as straight a line as you would think. But over time, I think it always works. is if you're not returning cost of capital, eventually something happens. And I don't predict when or how or I think we saw the double Chapter 11 at Spirit at the bottom end, and those are the struggles you see and how they try and reengineer whether they succeed. Those are all things that I think we have to watch.

Got it. Just kind of on that point about triggering growth in all the cabins. Obviously, you guys have done an exceptional job of creating a very, very premium first-class product. Is there room to differentiate in main cabin as well? Or does that need to be relatively comparable across airlines just by definition?

Well, I think we have -- if you think about the Coach product, adding Comfort+, which -- and we're going to iterate on Comfort+ to -- that's the one we're focused on next year to not only expand it, but to bring more options to customers. And I think, yes, absolutely is that we did the front first because it was the easiest.

And as we continue to reengineer how we think about selling tickets, you'll see us come up with more creative solutions here that try and value what consumers value so that when they pay a higher ticket price, they know they're getting more value.

Got it. To that end, kind of you recently kind of did launch tiers for First Class and for premium economy kind of how has that gone down with customers? And what has the reception to that been?

It's great. I think there's more room to go there. We're working very hard, and we're going to be very diligent. I think one thing we don't want to do is we've got such a great brand right now is we don't want to get sideways with our existing base. So this is going to be a test-and-learn project, and it's going to be over time, and it will be a gentle test and learn and see what customers like.

And then if we see positive reactions to it like we have with the other tiers, is to continue to evolve those. And so that's what we're pretty excited about over the next 5 years is being able to really what we call internally merchandising 2.0 is -- all we did was sell a train ticket 20 years ago. Now we want to sell experiences. We want to sell value. And we're on that journey. There's a lot of room to go.

Got it. How do you figure out what the limits of that lots of room to go are? I mean, obviously, we saw one airline try to build a resort that didn't go very well. So kind of what's the limits to how -- where Delta will spread its wings and brand for the experience?

You're not going to be building resorts. Are you?

Still working on better clubs.

Exactly.

No. Dan, do you want to take that?

No, I think the things that you've seen us continuing to do, I think clubs are a great point. What a differentiator we now have with the Delta One experience. And hopefully, many in the room have been able to experience it, but being able to go curbside through the club almost like it's private, right, and right up into the club experience and into the plane. It's just a real differentiated level of service, and we're going to continue to find ways of continuing to do that segmentation and that investment in the brand and premium over time.

It warns my heart, and I'll share some internal factoids with you is that we now have, of course, Delta One on both sides with the private security lanes in L.A. and in New York. Our most profitable market last month was JFK [ LA ] and it's increased despite the fact that those costs are now embedded in it, the profitability has increased substantially over last year.

And I think when you think about what do consumers really want, they want the best, right? And when you produce the best, you can tell, and they react. And so we have a lot of work to continue to do. We're always striving to be better and consumers have historically reacted incredibly well to that, and we're going to continue on that path. They'll tell us when they're done.

Fair enough. On that note, any closing remarks from Dan?

No, thank you for having us. We feel good about the year, and it is truly a year that's different than what we thought, but one that truly differentiates and really that differentiation and durability.

Very good. Glen, Dan, Julie, thanks so much for being here.

Thanks Ravi.