The airline industry isn’t for the faint of heart; it’s cyclical, capital-intensive, and brutally competitive. But it’s also an industry where fortunes can shift swiftly, and Q2 earnings from Delta Air Lines (DAL), United Airlines (UAL), and American Airlines (AAL) just gave us a front-row seat to the action.
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With shifting demand patterns, cost pressures, and geopolitical ripples like tariffs and election-year uncertainty in play, the big three U.S. carriers are navigating through economic turbulence with sharply contrasting strategies. Moreover, their relative performance also speaks volumes about their respective chances for the remainder of 2025.
Delta Air Lines (NYSE:DAL)
Delta has historically been the golden child of U.S. airlines, and its Q2 results show why. The airline posted a $1.8 billion pre-tax profit on $15.5 billion in revenue, with an EPS of $2.10, edging out the Street’s $2.05 forecast. CEO Ed Bastian explained that laser focus on premium cabins and loyalty programs paid off, with premium revenue jumping 5%. That said, main cabin sales dipped 5%, reflecting a market where travelers are splurging on comfort but pinching pennies on basic fares. The company’s free cash flow reached $700 million, with a full-year target of $3-4 billion, signaling strong financial discipline as well.
But it’s not all smooth flying. Delta President Hauenstein noted, “Overall demand for air travel remains similar to last year with softness largely contained to the main cabin and particularly during off-peak periods.”
He added that booking curves have shifted closer to travel dates, which signals cautious consumer behavior, especially in domestic markets. CFO Dan Janki also flagged a 2.7% rise in non-fuel unit costs due to labor and maintenance pressures, though Delta’s cost control remains top-tier. With shares trading below 10x this year’s expected EPS, I believe Delta remains reasonably valued despite this year’s rally.
Is DAL Stock a Buy, Hold, or Sell?
Currently, analyst sentiment is quite positive on Delta Airlines. The stock carries a Strong Buy consensus rating, based on 12 Buy and one Hold ratings assigned over the past three months. No analyst rates the stock a Sell. Meanwhile, DAL’s average stock price target of $67.88 implies ~28% upside over the next twelve months.
United Airlines (NASDAQ:UAL)
United’s latest report painted a picture of resilience, with the airline posting EPS of $3.87, edging out Wall Street’s forecast of $3.81, though revenue of $15.24 billion missed the $15.35 billion mark. CEO Scott Kirby emphasized an 8.7% operating margin and $1.7 billion pre-tax profit, supported by strength in international routes, particularly trans-Pacific markets like Japan, where demand held firm. United is also pushing premium hard, with Polaris business class upgrades and new lounge investments boosting loyalty revenue by 8%.
Domestic markets, however, proved a sore spot. Chief Commercial Officer Nocella confirmed that domestic passenger revenue per available seat mile was down 7% year-over-year, primarily due to industry capacity growth outpacing demand and increased price sensitivity in the main cabin.
This was compounded by air traffic control issues at hubs like Newark, which shaved 1.2 points off margins. At today’s prices, I am somewhat skeptical of United’s investment case despite its below-average P/E of ~8.5x. Its global focus is a strength, but domestic weakness and operational hiccups make it a gamble, in my view.
Is UAL Stock a Good Buy?
On Wall Street, UAL stock features a Strong Buy consensus rating based on 14 Buy and one Hold ratings. No analyst rates the stock a Sell. UAL’s average stock price target of $109.71 implies about 25% upside potential over the next 12 months.
American Airlines (NASDAQ:AAL)
American Airlines surprised the market two weeks ago by reporting a Q2 EPS of $0.95, topping the $0.79 forecast, though down from last year’s $1.09. Revenue hit $13.123 billion, slightly down year-over-year, with a 7.9% operating margin lagging Delta and United. Premium cabins and a 5% rise in Atlantic passenger revenue kept them in the game, but a 2.7% drop in unit revenue shows they’re struggling in a softening domestic market. CEO Robert Isom’s focus on loyalty (AAdvantage accounts were up 7%) and new premium offerings like the Flagship Suite are steps to close the gap with rivals.
However, the company’s Q3 outlook disappointed, forecasting a loss of 10-60 cents per share versus Wall Street’s 7-cent loss expectation. CFO May cited “a material drop in demand in the domestic market where we produce over 70% of our revenue.”
However, Mr. Isom remains optimistic about premium demand, saying, “Our new Flagship Suite is rolling out to drive high-value customers.” With shares down 33% year-to-date, American is the underdog, trading at a lower valuation than Delta or United at a 2026 normalized P/E of 6.6. It’s likely a value play for risk-tolerant investors, but its weaker margins and reliance on a domestic recovery make it less compelling unless demand rebounds sharply.
Is AAL Stock a Good Stock to Buy?
American Airlines is currently covered by 10 Wall Street analysts, and sentiment is evenly split. The stock carries a Moderate Buy consensus rating with five analysts currently bullish and five neutral. AAL’s average price target of $13.70 indicates ~17.5% upside potential over the next twelve months.
Delta Leads the Pack as U.S. Airline Giants Diverge
The big three U.S. airlines have just revealed their latest results—and their trajectories couldn’t be more different. Delta continues to shine, driven by strong premium demand and solid execution, reinforcing its reputation as Wall Street’s favorite. United shows promise with international growth, but domestic softness and operational hiccups remain headwinds.
American Airlines, meanwhile, lags behind with thin margins and an outlook overly dependent on a struggling domestic market. All things considered, Delta appears best positioned for smooth skies ahead, while United and American are likely to remain embroiled in market turbulence.