Delta Air Lines, Inc.: Keep Climbing (Margins / Credit Ratings) Higher; 2Q26 Equity & Credit Takeaways

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Delta Air Lines, Inc.: Keep Climbing (Margins / Credit Ratings) Higher; 2Q26 Equity & Credit Takeaways

n any given day, its international forward

bookings could be fifteen points ahead of domestic. This is an important reminder in the

context of assessing future yield performance. Fare increases gather revenue momentum

over time, given travel is a planned event. And this is particularly true in international

markets. The translation? Any perceived TATL RASM weakness in the 2nd and 3rd

quarters needs to take this into account, as much of that revenue was booked prior to the

oil-related yield uplift (including these authors’ December-booked tickets to London for

Farnborough next week, which would obviously price out higher if booked today…

though it’s difficult to disaggregate the impact of inventory from the analysis).

• So if it sounds like we’re in the bull camp when it comes to maintaining recent yield

gains, well, it should - Final point on this topic: Spirit is no more, Frontier just announced

another 11 aircraft sales, and Southwest appears to have genuinely embraced profit over

growth, owing to substantive input from its owners. As such, we continue to view 4th

quarter domestic capacity as implied by current filings, currently hovering around 4%,

as inflated….and anticipate moderation closer to 2.5% in coming weeks.

• What a difference 3,226 days can make - September 8th, 2017 is the last instance we can

identify that UAL’s Scott Kirby publicly used the term “existential threat” in describing

the likes of Spirit and Frontier. Admittedly, this has nothing to do with Delta - though

they’ve obviously benefited from the impairment of the Discount model - but it’s comical

(to us) to think back on said sentiments when reflecting on the industry’s structural