Airline stocks soared after Delta report. What encouraged the market?

Delta Air Lines, the largest U.S. airline by capitalization, reported for the third quarter better than expected and raised its profit forecast for the year. The carrier said it did not see a decline in demand, which encouraged investors. Quotes Delta jumped, pulling the shares of competitors.

Delta's third quarter revenue and earnings exceeded Wall Street expectations. The company reported adjusted earnings (EPS) of $1.71 per share on revenue of $15.2 billion. Analysts were expecting $1.52 per share and $15.1 billion in revenue, according to FactSet data cited by Barron's.

"Our customer is in a good financial position. We are not seeing a decline in demand," Delta CEO Ed Bastian told Bloomberg. Last quarter, corporate bookings on the airline's flights rose 8 percent and revenue from premium passengers rose 9 percent.

It's been a tough year for Delta investors: the airline's stock is still trading at a 1% loss from the beginning of the year, despite an impressive 76% increase from its April low. The company initially expected annual earnings above $7.35 per share, but revised expectations after U.S. President Donald Trump announced sweeping import duties in April, dampening demand for flights. Delta had returned a forecast in the $5.25-$6.25 range in July and has now raised it to $6. Analysts' consensus forecast is $5.80 per share.

"Demand is recovering and this provides a solid foundation for strong fourth quarter results. As we look to 2026 with confidence, Delta is well positioned for revenue growth, margin expansion and profit improvement consistent with our long-term financial model," said Bastian.

Shares of Delta Air Lines in trading on October 9 at one point rose almost 9%, but then growth slowed to 4.5%. Quotes of competitors' securities also jumped on the background of the strong report. At the intraday maximum shares of United Airlines grew by 8.3%, American Airlines - by 5.8%, Southwest Airlines - by 4%.

According to FactSet data, the JETS ETF fund, which tracks the airline industry, has added 50% from its April low, while United securities are up 97% over the same period, despite a modest 1% gain since the start of the year. However, the sector still lags the S&P 500 index, which has added 15% since the start of the year.

TD Cowen analyst Tom Fitzgerald called Delta's report "exceptionally positive across the board," Barron's writes. He notes that Delta's results send a bullish signal to United investors, given the company's focus on international, premium and corporate routes. The analyst maintained a buy recommendation on shares of both Delta and its rival United.

A total of 25 analysts are tracking Delta stock, according to MarketWatch. Of those, 23 advise buying the stock, one advises holding, and one advises selling. The Wall Street consensus forecast is for $70.9 per share, up 24% from the closing price on Oct. 8.

This article was AI-translated and verified by a human editor