Continued strength in premium ticket sales and co-branded credit card revenue, plus a sharp rise in corporate travel sales, propelled Delta to a strong third quarter.
Main cabin sales, conversely, remained weak in the third quarter, but the airline expects improved performance in Q4 and beyond, buoyed by discount airlines' capacity reductions.
"We expect a very healthy supply-demand balance across the industry into 2026," Delta president Glen Hauenstein said during Thursday's Q3 earnings call.
Delta reported $16.7 billion in operating revenue, a 6% year-over-year increase. Total revenue was up 4.1% and at the high end of its revenue forecast in July. Delta's operating margin was 10.1%, up from 8.9% a year earlier. Net income was $1.42 billion.
Keeping with long-term trends, sales of premium products led the way, increasing 9%. Meanwhile, main cabin sales declined 4%. That 13-point gap between premium and main cabin was the largest in the airline's history, J.P. Morgan investment analyst Jamie Baker noted during the earnings call.
Sales to companies with corporate contracts helped drive premium growth, jumping 8%. Reticence in the corporate travel sector, which surfaced during the early months of the Trump administration, appears to have faded. Delta said its surveys show that 90% of companies expect their travel volume to remain steady or increase next year.
The divergence between Delta's premium and main cabin sales is driving the airline's approach to cabin configurations. Next year, most of Delta's seat growth will be in the premium sector. It is retrofitting planes to have more extra-legroom seats and taking delivery of aircraft with more premium seats than planes in its current fleet.
Still, Hauenstein said that main cabin sales turned the corner approximately six weeks ago and that the airline's revenue per available seat mile is on the rise in its economy cabins.
Weak economy demand has hurt the entire U.S. airline industry for most of this year, but discount carriers have felt the brunt of it. Spirit Airlines expects to fly 27% fewer domestic seats in November while winding through a Chapter 11 bankruptcy restructuring, according to an analysis by consulting firm Ailevon Pacific. Frontier and Southwest also have reduced capacity.
Delta is projecting year-over-year revenue growth of 2% to 4% for the fourth quarter and an operating margin of 10.5% to 12%.