U.S. airline stocks took flight on Thursday after Delta Air Lines (NYSE: DAL) posted quarterly earnings that beat expectations, signaling a potential rebound for a sector that’s struggled amid tariff-related uncertainty and shifting consumer behavior.
Delta’s upbeat results ignited a broad rally, with shares of American Airlines (AAL) and United Airlines (UAL) surging more than 11%, and Southwest Airlines (LUV) and Alaska Air (ALK) climbing over 5% and 8%, respectively. The rally comes after months of cautious sentiment in the travel sector, with many carriers pulling back 2025 forecasts in response to global economic uncertainty and weaker forward bookings.
Delta’s Q2 results provided a much-needed dose of optimism. The company reported adjusted revenue of $15.5 billion and earnings per share (EPS) of $2.10—narrowly beating Wall Street expectations. Operating income hit $2 billion, with a 13.2% margin, slightly below last year’s 14.7% but still robust in a challenging environment.
Crucially, Delta said booking activity had stabilized, offering reassurance that passenger demand is holding steady despite consumer jitters related to trade policy. Premium ticket revenue rose 5% year over year, and loyalty program revenue climbed 8%—a strong sign that high-value travelers remain engaged.
Delta’s CEO Ed Bastian struck an optimistic tone, stating, “As we look to the second half of our centennial year, we remain focused on executing our strategic priorities and managing the levers within our control to deliver strong earnings and cash flow.”
The momentum quickly spread across the industry. Investors appeared encouraged that Delta’s success could be a bellwether for other major carriers, all of which are slated to report earnings in the next two weeks. With oil prices down significantly—a critical cost input for airlines—there is growing belief that airlines could outperform expectations in the second half of the year.
Delta reported an 11% year-over-year drop in fuel expenses, driven by a 14% reduction in its per-gallon price. That trend is expected to benefit peers like United, American, and Southwest as they release their financials.
Deutsche Bank analysts noted that United and American are both poised to beat consensus earnings, with regional and niche carriers like Sun Country (SNCY) and SkyWest (SKYW) also showing potential for outperformance.
After a rough start to the year marked by economic headwinds, regulatory uncertainty, and supply chain pressures, Thursday’s surge in airline stocks may signal the start of a recovery phase. While risks remain—including volatile energy prices, evolving travel patterns, and the impact of trade policies—Delta’s performance shows that airlines with diversified revenue streams and efficient operations can still thrive.
Investors will be watching closely as earnings from other carriers roll in. If they echo Delta’s results and reintroduce full-year guidance, it could further boost confidence in the sector—and signal clear skies ahead for airline investors
