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DAL vs. AAL: Which Airline Stock is a Stronger Play Now?
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Key Takeaways
American Airlines cut its 2025 EPS outlook due to weak demand, tariffs, and high costs.
Delta reinstated its 2025 EPS view, boosted by strong passenger revenues and fuel savings.
DAL raised its dividend 25% and ended Q2 2025 with more cash than current debt, underscoring strength.
Delta Air Lines (DAL - Free Report) and American Airlines (AAL - Free Report) are two well-known names in the Zacks Transportation- Airline industry, accounting for a significant market share in the U.S. airline space. Delta, based in Atlanta, GA, is a founding member of the SkyTeam alliance. It is known for its extensive domestic and international network. DAL and its alliance partners collectively serve over 120 countries and territories, with more than 800 destinations served globally.
On the other hand, American Airlines, based in Fort Worth, TX, is a founding member of the oneworld global alliance. AAL is known for its extensive domestic and international network. The carrier serves over 350 destinations globally, with more than 226 million passengers having boarded its flights in 2024.
Given this backdrop, let’s examine closely to find out which airline player currently holds the edge, and more importantly, which might be the smarter investment now.
The Case for AAL
While releasing its second-quarter 2025 results last month, AAL’s management gave an unimpressive outlook for the third quarter, wherein AAL expects a loss per share of 10-60 cents. Sluggish domestic travel demand results in more unsold seats and a decline in fares. Even though guidance for full-year 2025 has been reinstated, it is lower than the previous view, mainly due to the tariff-induced uncertainty, which is hurting air travel demand. AAL expects adjusted 2025 EPS to range from a loss of 20 cents to a profit of 80 cents. This is significantly lower than the previous forecast of $1.70 to $2.70 per share
AAL posted better-than-expected earnings per share in the June quarter, which meant that the company maintained its earnings surprise record, having surpassed estimates in each of the last four quarters.
Apart from the well-documented tariff-induced slowdown in domestic air travel demand, mishaps like those involving American Eagle Flight 5342 in January also put the stock on its back foot. American Eagle, encompassing regional carriers, is a subsidiary of AAL.
AAL’s financial metrics indicate that its leverage is elevated and is a massive negative for its shareholders. The long-term debt burden of the company was pinned at $25.3 billion at the end of the second quarter of 2025, which translates into a debt-to-capitalization of 94.9%, which is above the industry’s 56.6%.
High labor costs (expenses on salaries and wages were up 10.9% year over year in the second quarter of 2025), mainly due to the deal with pilots inked in 2023, are hurting AAL’s bottom line.
Earnings Estimates for AAL
Due to the above-mentioned headwinds, earnings per share estimates for third-quarter 2025, fourth-quarter 2025, full-year 2025, and 2026 have moved south over the past sixty days.
Image Source: Zacks Investment Research
On a brighter note, the southward movement of oil prices bodes well for AAL’s bottom-line growth. This is because fuel expenses are a significant input cost for the aviation space. Crude oil is struggling in 2025, with prices sliding to multi-month lows. Tariff concerns, weakening consumer confidence, and production increase by OPEC+ have all contributed to this downward pressure. As evidence, expenses on aircraft fuel and taxes decreased 13% to $2.67 billion in the second quarter of 2025. Average fuel price per gallon (including related taxes) decreased to $2.29 from $2.7 a year ago. The oil price-induced cost relief could support margins and lend ticket pricing flexibility to airlines like AAL in this uncertain era.
The Case for DAL
Delta reported better-than-expected revenues and earnings per share for the second quarter of 2025, driven by higher-than-expected passenger revenues. DAL reinstated its 2025 earnings per share guidance of $5.25-$6.25, which it had withdrawn earlier in the year. It expects free cash flow of $3-$4 billion for the year.
Despite the tough conditions, the airline demonstrated resilience and has beaten the Zacks Consensus Estimate for earnings thrice in the past four quarters (having missed the mark in the other quarters).
Despite the earnings beat, the bottom line declined substantially year over year due to high labor costs. Even though the 90-day extension to the pause in higher tariffs against China serves as a breather, the lack of clarity on the tariff front means that the uncertain scenario is unlikely to go away soon. This is likely to continue hurting air travel demand.
However, the southward movement of oil price bodes well for the bottom-line growth of Delta. This is because fuel expenses are a significant input cost for the aviation space. Crude oil is struggling in 2025, with prices sliding to multi-month lows. A 13% drop in fuel expenses at DAL helped offset rising costs, aided by falling oil prices in the June quarter.
Highlighting its shareholder-friendly stance, DAL’s management announced a 25% hike in the quarterly dividend payout to 18.75 cents per share. This was the second dividend increase announced by DAL since its resumption of quarterly dividend payments following the COVID-induced hiatus. The decision reflects DAL’s shareholder-friendly approach. Financial prosperity owing to strong passenger revenues may have led to the dividend hike. DAL’s dividend yield is currently pegged at 1.23%. In this scenario of uncertainty, DAL’s dividend-paying capacity is a positive for income-seeking investors. This highlights confidence in its cash flow and prospects.
We remind investors that DAL had resumed paying quarterly dividends in 2023 of 10 cents per share after a COVID-induced hiatus. In June 2024, management announced a 50% hike in its quarterly dividend payout.
Delta’s liquidity position is encouraging. The airline ended the second quarter of 2025 with cash and cash equivalents of $3.33 billion, higher than the current debt level of $2.22 billion. DAL's efforts to repay its debts are encouraging, too. The company’s times interest earned ratio of 9 compares favorably with the industrial levels.
Upbeat Earnings Estimate Revision for DAL
Image Source: Zacks Investment Research
Conclusion
There is no doubt that tariff-induced uncertainty is hurting both AAL and DAL. A resolution of the problem, hints of which have been emanating lately, will serve both airlines well. Apart from the tariff-induced uncertainty, headwinds like high debt and labor costs are placing AAL on its back foot.
DAL’s strong liquidity and dividend-paying capacity, even in such an uncertain scenario, are huge positives and place it favorably when compared to AAL, which does not pay any dividends. In such a scenario, dividends are a major source of consistent income for investors, though they do not offer dramatic price appreciation. Stocks backed by regular dividends can reduce the volatility of a portfolio.
A good liquidity position gives operational flexibility, while the recent dividend hike indicates cash flow stability and a shareholder-friendly stance. In view of our analysis, DAL seems a better pick than AAL now.
Image: Shutterstock
DAL vs. AAL: Which Airline Stock is a Stronger Play Now?
Key Takeaways
Delta Air Lines (DAL - Free Report) and American Airlines (AAL - Free Report) are two well-known names in the Zacks Transportation- Airline industry, accounting for a significant market share in the U.S. airline space. Delta, based in Atlanta, GA, is a founding member of the SkyTeam alliance. It is known for its extensive domestic and international network. DAL and its alliance partners collectively serve over 120 countries and territories, with more than 800 destinations served globally.
On the other hand, American Airlines, based in Fort Worth, TX, is a founding member of the oneworld global alliance. AAL is known for its extensive domestic and international network. The carrier serves over 350 destinations globally, with more than 226 million passengers having boarded its flights in 2024.
Given this backdrop, let’s examine closely to find out which airline player currently holds the edge, and more importantly, which might be the smarter investment now.
The Case for AAL
While releasing its second-quarter 2025 results last month, AAL’s management gave an unimpressive outlook for the third quarter, wherein AAL expects a loss per share of 10-60 cents. Sluggish domestic travel demand results in more unsold seats and a decline in fares. Even though guidance for full-year 2025 has been reinstated, it is lower than the previous view, mainly due to the tariff-induced uncertainty, which is hurting air travel demand. AAL expects adjusted 2025 EPS to range from a loss of 20 cents to a profit of 80 cents. This is significantly lower than the previous forecast of $1.70 to $2.70 per share
AAL posted better-than-expected earnings per share in the June quarter, which meant that the company maintained its earnings surprise record, having surpassed estimates in each of the last four quarters.
American Airlines Price and EPS Surprise
American Airlines price-eps-surprise | American Airlines Quote
Apart from the well-documented tariff-induced slowdown in domestic air travel demand, mishaps like those involving American Eagle Flight 5342 in January also put the stock on its back foot. American Eagle, encompassing regional carriers, is a subsidiary of AAL.
AAL’s financial metrics indicate that its leverage is elevated and is a massive negative for its shareholders. The long-term debt burden of the company was pinned at $25.3 billion at the end of the second quarter of 2025, which translates into a debt-to-capitalization of 94.9%, which is above the industry’s 56.6%.
High labor costs (expenses on salaries and wages were up 10.9% year over year in the second quarter of 2025), mainly due to the deal with pilots inked in 2023, are hurting AAL’s bottom line.
Earnings Estimates for AAL
Due to the above-mentioned headwinds, earnings per share estimates for third-quarter 2025, fourth-quarter 2025, full-year 2025, and 2026 have moved south over the past sixty days.
On a brighter note, the southward movement of oil prices bodes well for AAL’s bottom-line growth. This is because fuel expenses are a significant input cost for the aviation space. Crude oil is struggling in 2025, with prices sliding to multi-month lows. Tariff concerns, weakening consumer confidence, and production increase by OPEC+ have all contributed to this downward pressure. As evidence, expenses on aircraft fuel and taxes decreased 13% to $2.67 billion in the second quarter of 2025. Average fuel price per gallon (including related taxes) decreased to $2.29 from $2.7 a year ago. The oil price-induced cost relief could support margins and lend ticket pricing flexibility to airlines like AAL in this uncertain era.
The Case for DAL
Delta reported better-than-expected revenues and earnings per share for the second quarter of 2025, driven by higher-than-expected passenger revenues. DAL reinstated its 2025 earnings per share guidance of $5.25-$6.25, which it had withdrawn earlier in the year. It expects free cash flow of $3-$4 billion for the year.
Despite the tough conditions, the airline demonstrated resilience and has beaten the Zacks Consensus Estimate for earnings thrice in the past four quarters (having missed the mark in the other quarters).
Delta Air Lines Price and EPS Surprise
Delta Air Lines, Inc. price-eps-surprise | Delta Air Lines, Inc. Quote
Despite the earnings beat, the bottom line declined substantially year over year due to high labor costs. Even though the 90-day extension to the pause in higher tariffs against China serves as a breather, the lack of clarity on the tariff front means that the uncertain scenario is unlikely to go away soon. This is likely to continue hurting air travel demand.
However, the southward movement of oil price bodes well for the bottom-line growth of Delta. This is because fuel expenses are a significant input cost for the aviation space. Crude oil is struggling in 2025, with prices sliding to multi-month lows. A 13% drop in fuel expenses at DAL helped offset rising costs, aided by falling oil prices in the June quarter.
Highlighting its shareholder-friendly stance, DAL’s management announced a 25% hike in the quarterly dividend payout to 18.75 cents per share. This was the second dividend increase announced by DAL since its resumption of quarterly dividend payments following the COVID-induced hiatus. The decision reflects DAL’s shareholder-friendly approach. Financial prosperity owing to strong passenger revenues may have led to the dividend hike. DAL’s dividend yield is currently pegged at 1.23%. In this scenario of uncertainty, DAL’s dividend-paying capacity is a positive for income-seeking investors. This highlights confidence in its cash flow and prospects.
We remind investors that DAL had resumed paying quarterly dividends in 2023 of 10 cents per share after a COVID-induced hiatus. In June 2024, management announced a 50% hike in its quarterly dividend payout.
Delta’s liquidity position is encouraging. The airline ended the second quarter of 2025 with cash and cash equivalents of $3.33 billion, higher than the current debt level of $2.22 billion. DAL's efforts to repay its debts are encouraging, too. The company’s times interest earned ratio of 9 compares favorably with the industrial levels.
Upbeat Earnings Estimate Revision for DAL
Conclusion
There is no doubt that tariff-induced uncertainty is hurting both AAL and DAL. A resolution of the problem, hints of which have been emanating lately, will serve both airlines well. Apart from the tariff-induced uncertainty, headwinds like high debt and labor costs are placing AAL on its back foot.
DAL’s strong liquidity and dividend-paying capacity, even in such an uncertain scenario, are huge positives and place it favorably when compared to AAL, which does not pay any dividends. In such a scenario, dividends are a major source of consistent income for investors, though they do not offer dramatic price appreciation. Stocks backed by regular dividends can reduce the volatility of a portfolio.
A good liquidity position gives operational flexibility, while the recent dividend hike indicates cash flow stability and a shareholder-friendly stance. In view of our analysis, DAL seems a better pick than AAL now.
While DAL carries a Zacks Rank #3 (Hold), AAL has a Zacks Rank #4 (Sell) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.