Delta Air Lines at Morgan Stanley Conference: Strategic Insights Unveiled

On Thursday, 11 September 2025, Delta Air Lines (NYSE:DAL) presented at Morgan Stanley’s 13th Annual Laguna Conference, highlighting its strategic positioning in a recovering airline industry. The company showcased robust domestic corporate demand and premium product strength, despite challenges in transatlantic performance. Delta remains optimistic about its diversified revenue streams and future growth prospects.

Key Takeaways

• Delta Air Lines reported its highest post-pandemic corporate sales in September.
• Over 50% of Delta’s revenues now come from premium products and services, reducing reliance on the main cabin.
• The airline anticipates generating $3 to $4 billion in free cash flow within its long-term framework.
• Delta is on track for third-quarter and full-year earnings with double-digit margins and returns.
• Operational performance leads the industry, with adjustments made to capacity in off-peak periods.

Financial Results

• Revenue Guide: Delta raised its revenue guidance to the high end of its previously stated range.
• EPS: Guidance remained unchanged, focusing on demand inflection.
• Non-Fuel Costs: Expected to be flat to slightly up for Q3; low single-digit growth anticipated for the full year.
• Full-Year Earnings: Projected around $5 billion, consistent with the previous year despite industry declines.
• Debt: Delta focuses on reducing debt, with a recent upgrade to a positive outlook by a ratings agency.

Operational Updates

• Operational Performance: Delta continues to lead in operational metrics despite a challenging environment.
• Capacity Rationalization: Adjustments in domestic capacity have improved trends post-summer.
• Premium Products: Premium offerings are driving unit revenues, with a record number of premium seats planned for 2026.
• Corporate Travel: Strength observed in banking, financial services, and technology sectors.
• International Routes: Transatlantic routes underperformed, while Latin and Pacific regions showed better results.

Future Outlook

• Demand Improvement: Positive trends in consumer and corporate confidence are boosting TSA volumes.
• Premium Products: Continued investment with no signs of diminishing returns.
• Capacity Planning: Plans to align capacity with demand by 2026.
• Industry Structure: Airlines not covering their cost of capital may face increased challenges.
• Margin Improvement: Long-term margin growth expected from main cabin return improvements.

Q&A Highlights

• Consumer Trends: Delta’s consumer base has an average income over $100,000 per year.
• Revenue Diversification: More than 50% of revenues are from non-main cabin sources.
• Corporate Travel Recovery: Strength in segments like banking and technology.
• Premium Card Demand: Robust demand for premium cards, reflecting the airline’s strategy.
• Cost of Capital: Airlines not earning their cost of capital will face more challenges.

For a comprehensive understanding, readers are encouraged to refer to the full transcript.

Full transcript - Morgan Stanley’s 13th Annual Laguna Conference:

Ravi, Laguna: Great. Kicking off the Airlines content for today, we are very happy to welcome back to Laguna Delta Air Lines, and friends of Laguna, Glen Hauenstein, President, Dan Janki, EVP and CFO, and Julie Stewart, VP of IR and Corporate Development. Team, thanks so much for being here. Julie, over to you.

Julie Stewart, VP of IR and Corporate Development, Delta Air Lines: Yeah. I’ll just do a quick disclaimer here. Just as a reminder, today’s presentation contains forward-looking statements that represent our expectations about future events. All forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that may cause those differences can be found in our SEC filings. Ravi, thank you for having us. This is always one of the highlights of the year. To get us started, now I’ll hand it over to Glen for a couple of remarks.

Glen Hauenstein, President, Delta Air Lines: Perfect. Yeah. Hey, Ravi, thanks again for having us. What a nice conference. I hear it’s a record attendance this year.

Ravi, Laguna: It is, yeah.

Glen Hauenstein, President, Delta Air Lines: I think record attendance means probably more people flew here on business.

Ravi, Laguna: Right. We try our best to make it happen.

Glen Hauenstein, President, Delta Air Lines: So.

Ravi, Laguna: We like that.

Glen Hauenstein, President, Delta Air Lines: Yeah, we like that. Just maybe start with the current environment that’s kind of in line with what we’re seeing. We’re seeing very strong domestic corporate demand into the fall, which we’re very excited about. We actually had our highest post-pandemic corporate sales number for any day in any week in this September. You know, looking like the fall is going to be quite solid in terms of the booking demand for corporate, as well as high-yield leisure. Both of those segments are doing incredibly well. A little bit of backing up now into the summer and what this quarter is about and how we see the fourth quarter maybe coming into focus is that domestic inflected into positive territory early in the quarter, which was great. We see that continuing to happen through the end of the year.

We can put probably a check mark in that, that we’ve seen the industry rationalize its capacity. We’ve seen, and then we see the corresponding increases in demand that you see in the TSA numbers. We’ve seen a lot more pricing power as we head into the fall. That’s a great environment for us to be in domestically. Internationally, I think we’ve got a couple of different things going on. We have noticed over the past few years, and I think we’ve talked about it in other conferences and calls, that July and August have not been the peak months that they once were in terms of high-end leisure into Europe. That’s an opportunity for us, as well as a challenge for this year. It was our worst performing entity in the third quarter, although very profitable still.

Ravi, Laguna: Yeah.

Glen Hauenstein, President, Delta Air Lines: We were always creating that church for Easter Sunday for June, July, August, and putting all we had in terms of the widebodies out into the marketplace for those peak months. This allows us, as we move forward, to spread that out a little bit more. As you think about it, October has become actually a peak month, and we’re heading in a transition from where August is less peaky to October being peaky. You see a big sequential improvement in Transatlantic as you move out of the summer and into what’s historically been the shoulder season. There is opportunity for us to, again, tailor capacity to demand in future summer scheduled seasons. We’re excited about that. We’re a bit disappointed in terms of the Transatlantic results, but even digging a little bit further into those, it was all in main cabin.

Ravi, Laguna: Mm-hmm.

Glen Hauenstein, President, Delta Air Lines: Premium products across the board are continuing to perform. Within every entity, premium is leading in terms of unit revenues. Loyalty, amazing story continues with our loyalty program. This will be a record remuneration year for us. We have spend up double digits in the quarter, with August being the strongest month within the quarter. We see our cohort, which tends to be at the upper end, really in a strong financial position as we move into the fall. I am optimistic about the improving trends across the other international entities. I think Latin and Pacific have been less challenged than the Transatlantic through the summer. We see that continuing to build into the fall.

Shifting our gears from summer now in the rearview mirror and looking at fall, we’re really optimistic and we’re very encouraged about all the signs we’re seeing that the industry is moving, continuing to move in the right direction. Capacity rationalization domestically has occurred, and we see trends improving as we head out of the summer.

Ravi, Laguna: Got it. That is a very helpful update. You guys put out an update this morning as well. I have lots of follow-ups for you. I did want to start with a few high-level questions, though, just to kind of set the stage. Maybe Dan, I’ll start with you. Right? It’s,

Glen Hauenstein, President, Delta Air Lines: I think Dan had some comments.

Ravi, Laguna: Go for it.

Glen Hauenstein, President, Delta Air Lines: I’ll add some.

Ravi, Laguna: Absolutely. I share Glen Hauenstein’s view on the constructive nature of the industry and what we’re seeing commercially, from demand and from a supply perspective. When you step back and look at us operationally and financially, we continue to lead the industry.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: The operational performance of the team year to date, I want to thank the Delta team for that performance and leading our network peers related to that. That’s through a pretty challenging environment. If you’ve looked at third quarter in the operating stats, they continue to extend that leadership position with that. We’ve continued to make that investment. That’s a brand promise for us.

Glen Hauenstein, President, Delta Air Lines: Yep.

Ravi, Laguna: In that operational performance, with that, we do see in the third quarter that our non-fuel costs will be flat to slightly up versus flat to down that we initially guided.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: We’re on track for the year.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: Of low single digit. I think that’s an important anchor as you continue to see that performance that we committed to at the beginning of the year, even with the capacity reductions in the back half of the year. Financially, we’re on track for the third quarter in total year earnings, and that’s underpinned by a franchise that’s delivering double-digit margins, double-digit returns, and will generate free cash flow, $3 to $4 billion within the long-term framework that we laid out. I think as the year is talked about, really that it’s unfolded differently than what we thought, but it’s really demonstrated Delta’s differentiation durability. In a year where the industry is going to be down significantly in earnings, you know, we’re going to be right around that $5 billion mark.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: That’s pretty much on par with last year. We’re going to continue that investment back in the business of capital allocation, focused on reinvesting back into the franchise to strengthen those competitive positions, and continue to focus on our number one priority of strengthening the investment-grade balance sheet, paying down debt. It was nice, again, this quarter to see another marker pitch out, taking us from stable to positive.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: Another sign that us continuing to make progress on that and differentiating that way. Overall, different year.

Glen Hauenstein, President, Delta Air Lines: Yep.

Ravi, Laguna: was a very good year for us.

Glen Hauenstein, President, Delta Air Lines: Got it. Maybe I’ll just follow up right there then. Obviously, you guys took your revenue guide up to the high end of the range.

Ravi, Laguna: Mm-hmm.

Glen Hauenstein, President, Delta Air Lines: You left your EPS unchanged. Is that cost, the change there, the reason why? Can you just walk us down to the seam?

Ravi, Laguna: No, I think we wanted, we knew that in this environment that the real focus was on the inflection on the demand side.

Glen Hauenstein, President, Delta Air Lines: Yep.

Ravi, Laguna: We wanted to make sure that we were clear on what we were seeing on that. That’s the rationale in regards to adjusting that number. We wanted to be really clear in regards to the trends that we were seeing.

Glen Hauenstein, President, Delta Air Lines: Got it. Sounds good. Maybe kind of, exactly to your point and the focus, virtually all my incoming from investors has been on the demand side and, you know, where are we going here and the state of the consumer, right? It has been a very strange year for the consumer this year. You gave us all of the symptoms, if you will, or the evidence you’re seeing. If you just kind of went back to the root here, what do you think the state of the consumer looks like right now relative to what we saw in the beginning of the year?

Ravi, Laguna: The consumer is steadily improving. It was one of those years where they started with a lot of confidence. We saw the step back in late spring.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: You saw that erosion in both consumer and corporate confidence. You saw that translate into TSA volumes going from positive to negative 1% in the May, June timeframe. You have seen this steady improvement in both the consumer and the corporate confidence as we’ve moved through the midsummer and into the fall, as Glen Hauenstein talked about the outlook as we see it in the fourth quarter.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: You’re seeing that in TSA volumes that have inflected to now 1% to 2% in the underpinning. We also feel good about, you know, the Delta consumer.

Glen Hauenstein, President, Delta Air Lines: I think that’s the difference.

Ravi, Laguna: Yeah.

Glen Hauenstein, President, Delta Air Lines: There’s a lot of consternation, I think, at the bottom end for consumer.

Ravi, Laguna: Okay.

Glen Hauenstein, President, Delta Air Lines: Who’s lost income relative to inflation, who’s lost income in terms of as student loans come on, as interest rates reset. They’ve been under a lot of stress. I think you’ve seen that manifest itself in the airline business that the companies that cater to that cohort are not doing as well as the companies that cater to a higher income bracket. We’re at the very top, we believe, of the income brackets. Our average consumer is well over $100,000 a year. We’re at the top end, and that seems to be good. I think one of the biggest indications we have of how strong that is, is continuing to break records in terms of card spend.

Ravi, Laguna: Got it. Which was actually a great segue to my next question, which is, like, one of the biggest debates in the space since the pandemic is whether this time is really different with a bunch of the trends you’ve seen so far, right? You just spoke about this difference between the Delta consumer and the broader consumer. For airlines, what in your view, five years removed from the pandemic, is unequivocally structurally different versus what is still in debate?

Glen Hauenstein, President, Delta Air Lines: I want to take your shot.

Ravi, Laguna: Why don’t you start first? You’ve seen the decade plus here.

Glen Hauenstein, President, Delta Air Lines: I think what’s incredible is how we’ve been able to diversify our revenue streams.

Ravi, Laguna: Mm-hmm.

Glen Hauenstein, President, Delta Air Lines: Not be reliant on the coach products. This really goes probably even before pre-pandemic because we were on that path before, but it accelerated through the pandemic. Now with well over 50% of our revenues not tied to the main cabin, tied to premium products and services, ancillary revenues, card spend, we’ve got a diverse revenue stream now that we never had. I’m speaking for Delta Air Lines here, not the industry. I think that served us well. I think we’ve wanted to create something that’s differentiated and durable. We’ve worked very hard on re-engineering the entire company to be focused on that. I think it’s delivering. I think it’s unequivocally delivering. We’re able to get through what I consider to be a challenging period where industry capacity was up and TSA employments were down.

Ravi, Laguna: Mm-hmm.

Glen Hauenstein, President, Delta Air Lines: Really with still excellent profit numbers, I think that’s differentiated, that’s durable, and that is really a proof point of all the work we’ve done to try and re-engineer the way airlines sell tickets.

Ravi, Laguna: Got it, Dan.

Glen Hauenstein, President, Delta Air Lines: Did you want to?

Ravi, Laguna: I think that’s well said. I think you saw a lot of the themes when we talked last November at our Investor Day, right? Yes, it’s, I mean, as Glen Hauenstein said about the last five years, but it’s really the last 10 to 15 years of the strategy and that consistent investment and execution for that period of time that has differentiated Delta Air Lines.

Glen Hauenstein, President, Delta Air Lines: Got it. The next step of that is, you know, what does this mean for the industry? What does this industry look materially different, you know, 10, 15 years from now than it does today, right? In your view, if you just extrapolate these trends to their natural destination, what does this industry look like in 10 or 15 years? Not necessarily share shift through consolidation, but share shift through attrition or just share changes. Do we see the same structure that we have right now?

Ravi, Laguna: It’s hard to believe over the long term if you’re not producing your cost of capital that you can sustain.

Glen Hauenstein, President, Delta Air Lines: Yep.

Ravi, Laguna: I think we’ve seen that, particularly right now, it’s pronounced in the bottom end. It’s very dependent on main cabin. I think you’re watching in real time a change.

Glen Hauenstein, President, Delta Air Lines: Yep.

Ravi, Laguna: I think if you forward back to these were carriers that were growing quite quickly, and they were marginally profitable and now unable to sustain that. I think the question is, do people backfill that capacity? I would suggest to you that if it’s not working at their cost structure, it’s not going to work at anybody’s cost structure. A lot of this will probably be out for a prolonged period of time.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: I think that it’s changing. It will continue to change. Do I have a crystal ball where I know what it’s exactly going to look like? No. I do know that those carriers that are not earning their cost of capital and have not earned it for years and years and years are going to be much more challenged moving forward than those that are.

Glen Hauenstein, President, Delta Air Lines: Understood. Maybe I’ll just shift to current trends and kind of follow up on your opening remarks here. Can you just give us a little bit more of a detailed color on what you’re seeing, especially in domestic cabin because that’s been the big focus area all year, especially the forward booking curve that you’re seeing through holiday season? What does that look like from where you’re sitting?

Ravi, Laguna: Now that we’re less reliant on main cabin, we don’t need main cabin to be positive to post-positive returns. Indeed, that’s what we’re seeing now.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: Main cabin is still negative.

Glen Hauenstein, President, Delta Air Lines: Okay.

Ravi, Laguna: It’s being driven by the premium products and services in the market that is overcoming the small negative numbers in the main cabin. I say that because I think it’s huge upside. At some point, that has to rationalize. That is still to come on our forward-looking view; there will be rationalization of main cabin capacity. You’re seeing that real time. I believe it has to continue. That should, over time, improve main cabin results. If you can put that together with a continuing acceleration of premium, you get a very nice future that we’re very excited about.

Glen Hauenstein, President, Delta Air Lines: Got it. Moving to corporate, I think earlier this year you described corporate travel as choppy. Your update a few minutes ago sounded much better than that. What do you think is driving that transition? Is there a particular end market? What endings are we in that corporate recovery?

Ravi, Laguna: I think you’re seeing the strength in the segments that we’ve talked about: banking, financial services, technology leading the way.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: Still choppy in areas like industrials, manufacturing, those areas, but there’s real, real momentum in strength there. You’re seeing it on both volume and yield. Very constructive in moving forward and quite optimistic about it as we move into the fall here.

Glen Hauenstein, President, Delta Air Lines: Is this both domestic and international on the corporate side?

Ravi, Laguna: I’d say it’s more domestic than it is international. International is positive, but it’s not as robust as domestic.

Glen Hauenstein, President, Delta Air Lines: Got it. You guys do these kind of industry standard corporate surveys, which I don’t know if you do before the earnings call. What are these corporates telling you? Are they telling you they’re actually optimistic about the future, which would be a slightly different message than what you heard at Laguna yesterday? Does it feel like this is sustainable going into 2026, or is it still pretty choppy?

Ravi, Laguna: I think one of the things you have to recognize is we’re still not back to corporate at pre-pandemic levels.

Glen Hauenstein, President, Delta Air Lines: Yeah.

Ravi, Laguna: Everything else is far, far ahead in that space, but it warms my heart to know that this is a record attendance at conferences like this. People are back in the office. The companies, the country’s open for business. I think a lot of the hesitation that occurred when tariffs were first introduced is starting to unwind.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: I think we could see a very, very solid performance moving forward and into 2026. Our corporates are always telling us they’re going to spend more. It’s that how, how much are they going to spend? It’s year all-time record highs. We’ll see in this next survey, but the previous survey was year and all-time record high in terms of people who thought they were going to spend more moving forward.

Glen Hauenstein, President, Delta Air Lines: Got it. Hopefully you guys start to call out the Laguna conference as a positive seasonality event on your three-Q calls.

Ravi, Laguna: Absolutely.

Glen Hauenstein, President, Delta Air Lines: Maybe shifting gears a little bit and talking about premium. Premium revenues have outpaced main cabin revenues, as you pointed out, kind of ever since the pandemic. How is that trending? Are you starting to see maybe some diminishing returns there? What do you think that looks like for the end of the year?

Ravi, Laguna: We are not seeing diminishing returns there. As a matter of fact, we are increasing the percentage of seats that we have. Next year will be a record number of premium seats in 2026. Actually, main cabin domestic will be flat to slightly down. We are continuing to invest there. We’re investing. Every one of the returns is continuing to accelerate.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: We see no stopping of that. As you think of ways people can get there in different combinations, whether or not it’s your corporation, I’m very excited that Concur, for example, finally has put the premium products on display to the agencies. It’s a pretty new occurrence we’ve been working with them for years on. As soon as those products are displayed in the right way, we see a 30-point increase in their consumption. I think we’ve talked about opening the aperture over time to make premium products more accessible. I think we’ve done a great job, but we’re still, I’d say, in the mid-endings of making sure that the whole industry is focused on displaying what exactly the product is, which is very different than the way we started, which was a commodity grid.

Glen Hauenstein, President, Delta Air Lines: Yep. Got it. Obviously, you pointed out that that main cabin still is somewhat weak. Premium is very strong. The big, kind of thesis for Delta is you’re kind of upgrading people, not upgrading, but getting people to move up the cabin, right? Does this kind of stall that a little bit, or does it actually accelerate because the people who can jump from the back are making that leap? Kind of how do you think about the shift in trends between the front and the back of the plane?

Ravi, Laguna: We’re not done making premium products more accessible. This fall, we’ll be announcing tests of different products and services so that we can ascribe value to fare paid. I think if you go back in the industry 20 years ago, the problem with it was that there was no, you paid a higher fare and you got no value, right? When you were going to a cocktail party 20 years ago, you would say, "How much did you pay to go to Florida this year?

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: People would say $79, and they’d be proud of it. I think that’s because the industry didn’t put value in paying more than $79. You’ve seen those conversations shift to, "I fly Delta and I fly these classes of service." As we continue to bring more classes of service, more ways to get there, this is an evolution. It’s taken, we’re mid-endings in this.

Glen Hauenstein, President, Delta Air Lines: Yep.

Ravi, Laguna: We have a lot to go to continue to provide value to customers for higher fares.

Glen Hauenstein, President, Delta Air Lines: I think that’s allowing in the demographics also, right? They’re engaging earlier in the loyalty programs, engaging earlier with Amex and the card that’s skewing younger at times in certain elements. That’s providing the fuel for that product.

Ravi, Laguna: Got it. That was literally my next question, which is, premium is not just on the plane itself. It’s also kind of on the way to the plane and off the plane. Is that business somewhat countercyclical even? What are the trends you’re seeing with loyalty, with co-brand, with kind of demand for, you know, some of the other kind of non-aircraft premium services?

Glen Hauenstein, President, Delta Air Lines: I think what’s interesting in our own loyalty program in terms of card acquisitions, we’ve seen a really robust demand for the premium cards, similar to the airline. The more premium it is, the more consumers seem to want it. We’ve had really great successes with our high-end cards and working out a re-engineer to inject value into the lower-end cards so that people can, you know, life cycle through those.

Ravi, Laguna: Yep.

Glen Hauenstein, President, Delta Air Lines: Right now, most of the acquisitions in terms of the spend are coming at the very top end.

Ravi, Laguna: Got it. Moving to capacity. You, like the rest of the industry, obviously have adjusted your capacity for the back half of the year. I don’t think you’re quite done with fourth quarter just yet. Can you just talk about the changes you’ve made so far, what you’re looking ahead to, and what might potentially still happen for the fourth quarter? I think in the back half, we’ve talked about it. We adjusted capacity where the weakness in demand has been.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: It’s in the off-peak, it’s in the shoulder periods, and where we can in main cabin, we’ve made those adjustments. For 2026, it’s still early. We’re in the planning process, but the planning philosophy is always to ensure that capacity is aligned with demand.

Glen Hauenstein, President, Delta Air Lines: Yep.

Ravi, Laguna: The demand set and ensure that that’s aligned.

Glen Hauenstein, President, Delta Air Lines: Yeah, I just say, you know, usually one queue looks a lot like four queue.

Ravi, Laguna: Let’s hope this four Q doesn’t look like one Q. Are you happy with what you’re seeing from the industry so far, or do you think others still need to think more out?

Glen Hauenstein, President, Delta Air Lines: I think that’s really a question for the capital markets.

Ravi, Laguna: Okay.

Glen Hauenstein, President, Delta Air Lines: Do they really want to continue to invest in carriers that can’t return their cost of capital? You know, at some point, if you can’t do it, as difficult as it is to get rid of airplanes and get rid of people, if you can’t justify retaining them, you have to get rid of them.

Ravi, Laguna: Yep. I mean, we’ve said it earlier when you’re talking about the structure of the industry, right? You got the industry not earning its cost of capital, right?

Glen Hauenstein, President, Delta Air Lines: Yep.

Ravi, Laguna: You got two carriers that are making over 100% of the industry profit, and they’re the only two that are above their cost of capital. We’re fortunate that Delta had double-digit return on capital, but I think the one thing that you go back to in time is always you have to have that supply in line with demand. That’s the only way to improve that return on capital.

Glen Hauenstein, President, Delta Air Lines: Got it. Again, I want to go back to your comments on Europe and the changing seasonality there. I think you alluded to this on your Q2 call as well, where you talked about less peaky peaks and the shoulder periods taking up some of that slack. What does this mean for long-term planning? Like you said, it does smooth it out and make it easier to manage the peaks as well. How do we think about international profitability between the summer and the fall, not necessarily for this year, but just going forward, given this dynamic?

Ravi, Laguna: Summer, peak summer has become less profitable relatively, and spring and fall have become more profitable. That’s an airline network planner’s dream that the seasons last longer, that you can rotate the airplanes easier, and that you don’t have to create that peak of peak per Easter Sunday because a lot of those costs you carry for the whole year.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: The number of pilots we have in any particular fleet is usually driven by the number of hours we’re going to fly in July because that’s the peak of the peaks or historically has been. Our ability to now smooth that out should give us better pilot utilization, for example, on a year-round basis. That’s the part, you know, this isn’t by design. This is by the way consumers are reacting to the realities of what they see.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: It is a benefit, I think, in the medium and long term for airlines.

Glen Hauenstein, President, Delta Air Lines: Got it. Just to confirm, the net impact of the less profitable peak and the more profitable shoulder is better economics overall when you...

Ravi, Laguna: The net positive is coming out of that.

Glen Hauenstein, President, Delta Air Lines: Got it. Just kind of tapping on all your years of experience, kind of why is this an international-only thing? Is it just because, like, Europe is fun in the fall? Kind of why is this not showing up in domestic?

Ravi, Laguna: I think they’re very different consumers, right?

Glen Hauenstein, President, Delta Air Lines: Okay.

Ravi, Laguna: I think there’s a lot of things that go on in August. First of all, in Europe, there is no business component in August, for example. You’re competing for the hotels with the Europeans that are also off, and the rates are much higher.

Glen Hauenstein, President, Delta Air Lines: Mm-hmm.

Ravi, Laguna: That discourages some travel. I think there’s many factors in play here, but I think the net-net is that this is an interesting new development in the way we think about scheduling, the transatlantic in particular.

Glen Hauenstein, President, Delta Air Lines: Got it. Before I move on, any questions from the audience?

Unidentified speaker: Can you talk a little bit about the kind of change in the consumer and the demographics that you guys are catering towards? I know you’ve had a lot more technology and you have like a younger consumer, probably with a bigger wallet share. Just maybe some of the changes you’ve been seeing in that space and maybe premium in general, like what you’re doing to attract a younger, more, like tech-focused client.

Ravi, Laguna: I think we are always looking to attract a younger cohort. We have a lot of programs in place that are specifically designed for that and trying to understand the life cycle of a consumer. Usually, they don’t start in the premium products. They start in coach. I think that’s why it’s very important for us to make sure that we have best-in-class products and services across the whole spectrum, not just at the top end. We need you to fly us when you’re young and that money is much more important and harder to come by, that we have the best products and services and fly to where you want to fly. You enroll in our programs. The average age for a Delta One customer is 61.

When you think about how long it takes from when I start flying with Delta to when I’m actually buying those most premium products, there’s a 30, 40-year cycle in there that you have to have value all across that spectrum and continuing to make sure that we’re doing relevant things. I think things like the Uber partnerships, those Starbucks partnerships, things that you can use the SkyMiles every day in transactions and other brands that you love, and putting that together to have a comprehensive everyday experience.

Glen Hauenstein, President, Delta Air Lines: I think you add that those partnerships with the technology experience that you referenced, right? The onboard experience with free Wi-Fi, the interactive nature of it. When you start putting that together, you see that that draws the younger consumer in. The application, the joining of SkyMiles, members is younger as it relates to one signing up with free Wi-Fi. You’re engaging them differently and earlier.

Ravi, Laguna: Got it.

Glen Hauenstein, President, Delta Air Lines: Glen, do you have that age 61 stat, what it was before the pandemic?

Ravi, Laguna: Oh, it was probably even older.

Glen Hauenstein, President, Delta Air Lines: Yeah.

Ravi, Laguna: Coming down.

Glen Hauenstein, President, Delta Air Lines: Yeah.

Ravi, Laguna: It’s fueling down.

Glen Hauenstein, President, Delta Air Lines: Got it. Any more questions?

Ravi, Laguna: Yes, sir.

Glen Hauenstein, President, Delta Air Lines: Yeah.

Ravi, Laguna: Thank you.

Glen Hauenstein, President, Delta Air Lines: I had a quick question. On main cabin, did your guidance or forward guidance for next year contemplate much of an improvement in main cabin, or are the trends that you’re seeing in main cabin as you expected and what we can assume was in the guidance?

Ravi, Laguna: When we talked last November, when we were out from in our investor framework, we talked a lot about the things that Delta controls, right? The opportunities that we have in front of us as it relates to growing earnings over time. A lot of that comes from the high value, high margin revenue activity that Glen Hauenstein talked about. He talks about the items that we have to drive efficiency from our infrastructure, from new aircraft to the airport leverage that we get along with technology. Those are things that are in our control. We believe we can drive those forward both for margin growth and earnings growth for the airline. We’ve always said that if main cabin were to improve, that would only be in addition to that.

Glen Hauenstein, President, Delta Air Lines: Any more questions?

Ravi, Laguna: Maybe piggybacking off of that, obviously today you pointed to the high end of your revenue range for the quarter. When you think of your full-year EPS guide, what are some of the puts and takes that you think get you to the high versus the low end of that range?

Glen Hauenstein, President, Delta Air Lines: I think on the high end, you’d have to say that you’d have to see acceleration from demand from where we sit today.

Ravi, Laguna: Okay.

Glen Hauenstein, President, Delta Air Lines: You know, that is really the real leverage point.

Ravi, Laguna: Got it. Obviously, the opposite for the low end. That’s, yeah, understood. Obviously, you guys have done a great job at generating free cash flow, $3 to $4 billion for 2025. Can you just remind us again what the capital allocation priorities are? Obviously, you guys are very opportunistic with launching a buyback earlier this year, when the sector was turning off. How do you think about tactically allocating capital between the different uses?

Glen Hauenstein, President, Delta Air Lines: Yeah, you know, Delta’s got a long history in regards to the discipline and focus around capital allocation. About half of operating cash flow goes right back into reinvesting in the company, in the business around the key strategic priorities that we lay out and the consistency of that strategy.

Ravi, Laguna: Yep.

Glen Hauenstein, President, Delta Air Lines: Investing in the brand, the aircraft, the airports, et cetera, sets the foundation. Of course, with the free cash flow, the number one priority is strengthening the financial foundation through paying down debt. You’ve seen us continuously every year chip away at that, and we’ll continue to do that, taking our gross debt down to the low teens. We believe leverage at one time, and we feel over the next few years we’ll accomplish that. We’ve always had a track record of consistently returning capital to shareholders. We started that through the dividend a couple of years ago, and we continue to grow that. You’ll continue to see that as we go forward, maintaining that yield in line with the S&P 500.

Ravi, Laguna: Got it. Just kind of going back to the earlier comments about how you were saying that it’s not sustainable for airlines to not earn their cost of capital anymore. It does feel like there’s going to be this perpetual squeeze, at the kind of bad end of the industry, if you will. What does that mean for Delta, right? Kind of if that’s, if you’re just going to constantly keep seeing a squeeze at the low end, how does that translate into better returns for you guys? Maybe this is a margin question, right? Where do you see your margins going long term?

Glen Hauenstein, President, Delta Air Lines: I think in the long term, all the sectors have to produce returns. Right now you have the high-end producing returns and you have the main cabin really essentially not producing returns that are acceptable. That’s got to write itself over time, which I think the upside to our margin.

Ravi, Laguna: Mm-hmm.

Glen Hauenstein, President, Delta Air Lines: When all cabins are producing similar returns, you have a much more robust structure than we do today. That allows the bottom end, I think, to create value and profitability. How do you get there from here? It’s never as straight a line as you would think. Over time, I think it always works if you’re not returning cost of capital, eventually something happens.

Ravi, Laguna: Yep.

Glen Hauenstein, President, Delta Air Lines: I don’t predict when or how. I think we saw the double Chapter 11 at Spirit at the bottom end. Those are the struggles you see and how they re-engineer, whether they succeed. Those are all things that I think we have to watch.

Ravi, Laguna: Got it. Just kind of on that point, about triggering growth in all the cabins, obviously you guys have done an exceptional job of creating a very, very premium, first-class product. Is there room to differentiate in main cabin as well, or does that need to be relatively comparable across airlines just by definition?

Glen Hauenstein, President, Delta Air Lines: I think we have, if you think about the coach product, adding Comfort Plus, which, and we’re going to iterate on Comfort Plus to, that’s the one we’re focused on next year to not only expand it, but to bring more options to customers.

Ravi, Laguna: Mm-hmm.

Glen Hauenstein, President, Delta Air Lines: Absolutely, we did the front first because it was the easiest. As we continue to re-engineer how we think about selling tickets, you’ll see us come up with more creative solutions here that try and value what consumers value so that when they pay a higher ticket price, they know they’re getting more value.

Ravi, Laguna: Got it. To that end, you recently did launch tiers for first class and for premium economy. How has that gone down with customers, and what’s the reception to that been?

Glen Hauenstein, President, Delta Air Lines: It’s great. I think there’s more room to go there. We’re working very hard, and we’re going to be very diligent. I think one thing we don’t want to do is we’ve got such a great brand right now, we don’t want to get sideways with our existing base.

Ravi, Laguna: Yep.

Glen Hauenstein, President, Delta Air Lines: This is going to be a test and learn project, and it’s going to be over time. It’ll be a gentle test and learn and see what customers like. If we see positive reactions to it, like we have with the other tiers, it is to continue to evolve those. That’s what we’re pretty excited about over the next five years, being able to really, what we call internally, merchandising 2.0.

Ravi, Laguna: Mm-hmm.

Glen Hauenstein, President, Delta Air Lines: All we did was sell a train ticket, you know, 20 years ago. Now we want to sell experiences. We want to sell value. We’re on that journey. There’s a lot of room to go.

Ravi, Laguna: Got it. How do you figure out what the limits of that lots of room to go are? I mean, obviously we saw one airline try to build a resort that didn’t go very well. Kind of what’s the limits to how, you know, where Delta Air Lines will spread its wings and brand for that experience? I can beat them on resorts, are you?

Glen Hauenstein, President, Delta Air Lines: No, still working on better clubs.

Ravi, Laguna: Exactly.

Glen Hauenstein, President, Delta Air Lines: No, but Dan, you want to take that?

Ravi, Laguna: No, I think the things that you’ve seen us continuing to do, I think clubs are a great point. What a differentiator we now have with the Delta One experience. Hopefully many in the room have been able to experience it. Being able to go curbside through the club, almost like it’s private, right? Right up into the club experience and into the plane, it’s just a real differentiated level of service. We’re going to continue to find ways of continuing to do that segmentation and that investment in the brand and premium over time.

Glen Hauenstein, President, Delta Air Lines: You know, it warms my heart, and I’ll share some internal factoids with you, is that we now have, of course, Delta One on both sides with the private security lanes in LA and in New York. Our most profitable market last month was JFK LA.

Ravi, Laguna: Mm-hmm.

Glen Hauenstein, President, Delta Air Lines: It’s increased despite the fact that those costs are now embedded in it. The profitability has increased substantially over the last year. You know, I think when you think about what consumers really want, they want the best, right? When you produce the best, you can tell. They react. We have a lot of work to continue to do. We’re always striving to be better. Consumers have historically reacted incredibly well to that. We’re going to continue on that path. They’ll tell us when they’re done.

Ravi, Laguna: Fair enough. On that note, any closing remarks from any of you?

Julie Stewart, VP of IR and Corporate Development, Delta Air Lines: No, thank you for having us. We feel good about the year. It is truly a year that’s different than what we thought, but one that truly differentiates and really that differentiation and durability.

Ravi, Laguna: Very good. Glen, Dan, Julie, thanks so much for being here.

Glen Hauenstein, President, Delta Air Lines: Thanks, Ravi.

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