DAL vs. AAL: Which Airline Stock Looks More Promising Now?

Delta outperformed American on recent fundamentals and shareholder returns: Delta posted back-to-back earnings beats (four quarters, average beat >8%), issued FY2025 guidance of $6/share, raised its quarterly dividend 25%, and has resumed normal operations after a 43-day government shutdown — benefits that, together with lower fuel costs, support near-term margins despite ongoing labor cost pressures. American delivered a narrower-than-expected Q3 loss and has maintained an earnings-beat streak (four quarters, average beat >26%), guided Q4 EPS around $0.45 and FY adj. EPS of $0.65–$0.95, but carries elevated leverage (Q3 debt $10.6bn; debt-to-capital >100%) and faces rising labor-driven CASM (+2.5–4.5%), which clouds shareholder returns. With stronger price performance, a dividend policy and lower leverage, Zacks views DAL as the more attractive choice than AAL today, although both stocks are rated Zacks #3 (Hold).

Analysis

Delta Air Lines reported consecutive quarterly earnings beats (outperforming Zacks consensus in each of the past four quarters with an average beat in excess of 8%) and issued full-year 2025 guidance of $6.00 per share, while management raised the quarterly dividend by 25% and restored normal flight operations after a 43-day government shutdown; lower oil prices are a near-term tailwind but elevated labor costs remain a margin headwind. American Airlines posted a narrower-than-expected Q3 loss, maintained an earnings-beat streak (average beat >26% over four quarters) and guided Q4 EPS around $0.45 with FY adjusted EPS of $0.65–$0.95, yet reported $10.6 billion of debt at Q3-end and a debt-to-capital ratio in excess of 100%, signalling materially higher financial leverage than Delta. Market signals show Delta’s shares outperformed over the past six months (double-digit gain) and sentiment is mildly positive for DAL versus negative for AAL; both equities carry a Zacks Rank #3 (Hold). The combination of Delta’s shareholder returns, stronger price performance and lower leverage versus American suggests a cleaner risk/reward profile today, while key risks to monitor are labor-driven CASM, fuel-price volatility and potential operational disruptions.

Key Decisions for Investors

• Consider a modest overweight to DAL versus AAL given DAL's $6.00 FY2025 guidance, recent 25% dividend increase and superior six-month price performance,
• Keep AAL underweight or avoid initiating new material longs until leverage (debt-to-capital >100%) and CASM trends show durable improvement,
• Monitor short-term catalysts closely — quarterly results, Q4 CASM, labor negotiations, and fuel-price moves — and trim positions if guidance or margin pressure deteriorates,
• For income-focused allocations, accumulate or hold DAL selectively for dividend yield and capital stability but size exposure prudently given the sector-wide Zacks Hold stance