Delta Air Lines (NYSE: DAL) reported record full-year revenue of $58.3 billion and strong fourth-quarter results, yet shares plummeted 5% in premarket trading on Tuesday.
The plunge came as the investors focused on disappointing 2026 guidance and margin signals that suggest the airline’s profit growth will significantly slow next year.
The paradox reflects a earnings reality: record headlines can mask underlying softness when a company’s forward outlook fails to meet market expectations.
Delta Air Lines Q4 earnings: Record revenue masks quarter of caution
Delta’s December quarter generated $16.0 billion in operating revenue, up 2.9% year-over-year, while full-year revenue climbed 2.3% to $58.3 billion.
Adjusted earnings per share of $1.55 slightly beat analyst estimates, and the airline reported strong free cash flow of $4.6 billion for 2025, enabling $1.3 billion in profit-sharing for employees.
Yet beneath the headlines lay troubling trends.
The December quarter saw flat adjusted total unit revenue (TRASM), a key airline metric measuring revenue per available seat mile that indicates pricing power.
Main cabin revenue actually declined 7% year-over-year to $5.62 billion, despite premium cabin revenue rising 9%.
Additionally, the quarter saw a 2-percentage-point revenue headwind from the government shutdown, which cut bookings particularly in domestic markets.
2026 guidance triggers the selloff
The real shock came from forward guidance.
Delta projected full-year 2026 earnings per share of $6.50 to $7.50, representing about 20% growth at the midpoint, but this fell short of analyst consensus expectations of $7.32 per share.
For the crucial first quarter of 2026, the airline guided EPS between $0.50 and $0.90, compared to analyst forecasts of $0.72.
Dan Janki, Delta’s chief financial officer, said:
Looking ahead to 2026, we expect another year of cost performance aligned to our long-term framework on capacity growth of approximately 3 percent, as we continue to drive efficiencies while investing in our people and the customer experience.
Priced-for-Perfection syndrome
Delta shares had rallied 42% over the preceding six months, driven by falling fuel-cost expectations and a wave of analyst upgrades that positioned the stock near 52-week highs.
Investors had largely priced in both strong demand and margin expansion, assumptions now questioned by management’s cautious posture.
The airline’s Q1 2026 operating margin guidance of 4.5 to 6% sits below historical norms, signaling that Delta expects cost pressures or weaker pricing discipline in early 2026.
Delta’s $1.86 GAAP EPS for Q4 2025 beat estimates, but the adjusted figure of $1.55 came in just above consensus, leaving little upside surprise to sustain enthusiasm.
Until Delta management signals renewed confidence in 2026 execution and demonstrates that premium revenue growth can offset main cabin weakness, expect continued selling pressure.
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