Good morning, everyone, and welcome to the Delta Airlines March quarter, 2026 Financial Results Conference Call. My name is Matthew, and I will be your coordinator. At this time, all participants are on a listen-only mode until we conduct a question and answer session following the presentation. As a reminder, today's call is being recorded. If you have any questions or comments during the presentation, you may press star 1 on your phone to enter the question queue at any time. I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations and Corporate Development. Please go ahead.

Thank you, Matthew. Good morning, everyone, and thanks for joining us for our March quarter 2026 earnings call. Joining us from Atlanta today are our CEO, Ed Bastian, our Chief Commercial Officer, Joe Esposito, and our CFO for the March quarter and recently named Chief Operating Officer, Dan Jenke. We're also joined by our recently named CFO, Eric Snell, and President, Peter Carter. Ed will open the call with an overview of Delta's performance and strategy. Joe will provide an update on the revenue environment, and Dan will discuss costs in our balance sheet. After the prepared remarks, we'll take analyst questions. We ask that you please limit yourself to one question and a brief follow-up so that we can get to as many of you as possible. And after the analyst Q&A, we'll move to our media questions. As a reminder, today's discussion contains forward-looking statements that represent our beliefs or 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. Some of the factors that may cause such differences are described in Delta's SEC filings, and we'll also discuss non-GAAP financial measures. All results exclude special items unless otherwise noted. You can find a reconciliation of our non-GAAP measures on the Investor Relations page at ir.delta.com. And with that, I'll turn the call over to Ed.

Thank you, Julie, and good morning, everyone. Thank you for joining us. Before we begin, I want to acknowledge the ongoing conflict in the Middle East. Our thoughts are with all those affected, and we remain hopeful for a peaceful resolution. Turning to our performance for the March quarter, our results underscore the power of Delta's brand and the durability of our financial foundation. We delivered earnings that were 40 percent higher than last year and consistent with our January guidance, even with the significant step up in fuel and several external headwinds. Our strong results were driven by record revenue, which grew nearly 10%, increasing more than $1 billion over last year. Demand was broad-based across corporate and leisure with continued momentum in high-margin, diverse revenue streams. As a result, we delivered a pre-tax profit of $530 million and earnings of 64 cents per share with $1.2 billion of free cash flow and a 12% return earn uninvested capital. Our results are powered by the Delta people, who will always be our greatest competitive advantage. And I want to thank all 100,000 members of the Delta team for their commitment to delivering for our customers each and every day. For the seventh year, Delta's People First Culture has earned a place on the Fortune 100 Best Companies to Work for list, moving into the top 10 for the first time. When Delta succeeds, so do our people. In February, we celebrated $1.3 billion in profit-sharing payouts. Similar to last year, this was more than the rest of the industry combined. Looking at the current environment, demand remains strong. The acceleration we saw in March is carrying forward into the June quarter. Over the last month, cash sales, which are the clearest indicator of demand, are up double digits. The strength across the booking curve, geographies, and products. Our consumers are continuing to prioritize experiences with travel among the top spending categories. We are seeing this in continued double-digit spend growth on the Delta American Express card portfolio, building on last year's double-digit growth. Combined with strong corporate trends, our customer base is showing greater resilience to macro and geopolitical uncertainty. The war in the Middle East has driven an unprecedented spike in jet fuel, with prices roughly double what they were earlier in the year in this environment our focus is on what we can control running a reliable operation taking care of our people and customers and protecting our margins and cash flow as part of that we are meaningfully reducing capacity in the current quarter with a downward bias until we see the fuel situation improve the same time we're moving quickly to recapture higher fuel prices. With much of the industry still struggling to earn its cost of capital, there's a high sense of urgency to address higher fuel and reduce unprofitable flying. Over my career, I've seen many periods of disruption in this industry. In time and again, high fuel prices have been the most powerful catalyst for change, separating the winners and forcing weaker players to rationalize, consolidate, or be eliminated. Delta is navigating from an advantaged position. We have the best-in-class brand with a loyal, resilient, and financially healthy customer base. Our financial foundation transcends the industry, built on double-digit returns, durable cash flow, and an investment-grade balance sheet. And we own a refinery that provides a partial offset to elevated refining margins. Based on current demand trends, we expect low teens revenue growth in the June quarter, recapturing 40 to 50 percent of the more than $2 billion of fuel headwind in the quarter. With that, we expect to deliver a 6 to 8 percent operating margin with a pre-tax profit of $1 billion. Then we'll talk more about the components of our outlook. And while it's still early to update the full-year outlook, our structural advantages and execution keep us on track to achieve our long-term financial targets. So while higher fuel is a current impact to earnings, I'm confident this environment ultimately reinforces Delta's leadership and accelerates our long-term earnings power. 26 will be another opportunity to demonstrate how much we have structurally improved our business and reduced earnings volatility relative to prior cycles and to the industry. That also shows up in how we operate and serve our customers. We've long been recognized as the industry leader in reliability, and this quarter, Cerium named Delta the most on-time airline in North America for the fifth consecutive year. that reflects the strength of our operation and the pride that our teams take in delivering for customers. At the same time, over the past several months, particularly following severe weather, our reliability and recovery haven't met consistently enough our high standards. We understand the drivers, and this has our full attention. Teams are taking targeted actions to improve resilience and recovery, as well as addressing challenges that have resulted from contractual changes to our pilot working agreement that came into effect over the past year. While this will take a little bit of time to work through, we're partnering with our pilots and union leadership to ensure we deliver the reliability that Delta is known for. Reliability and experience go hand in hand, and we're continuing to invest for our customers. During the quarter, we placed firm orders for 95 additional aircraft, accelerating our fleet renewal and supporting international growth in the years ahead. We also expanded our industry-leading lounge network, opening a new Sky Club in Denver and completing three newly renovated clubs here in Atlanta. And as we invest in the physical experience on the ground and in the air, we're also continuing to set the standard for the digital travel experience. Fast-free Wi-Fi is already available to members on our 1,200 aircraft, enabling more personalized seatback and in-flight entertainment than any carrier in the sky. Last week, we took another strong step forward by announcing a game-changing partnership with Amazon Leo to bring the next generation of satellite connectivity to our aircraft. Enhanced capabilities and our growing partnerships create meaningful opportunities as we continue to build Delta Sync into a powerful platform for onboard digital engagement. This year, we expect to cross 110 million customer logins, reflecting strong adoption and growing engagement. With partners like the New York Times joining YouTube Premium, Paramount+, American Express, and T-Mobile, Delta Sync is delivering differentiated experiences that deepen customer engagement and strengthen our brand, and much more to come. So in closing, the March quarter reinforces the strength and durability of the Delta model and our investment thesis, strong demand, disciplined execution, and the benefits of the strategic choices that we've made to build a more resilient business. Most importantly, we have the best people in the industry, and that advantage cannot be replicated. it. With that, I'll turn it over to Joe to walk through revenue.

Thank you, Ed. I want to start by thanking the Delta people. In a quarter with strong demand and a dynamic backdrop, our people delivered for our customers. As I step into the chief commercial officer role, our focus is accelerating the integrated strategy that has consistently delivered a sustained unit revenue premium. Commercially, we're building on our strengths, leveraging our leading global network, scaling best-in-class domestic hubs and growing our international reach for customers we are continuing to invest across the travel journey and expanding choice enabled by better retailing a technology that improves how we sell and serve customers are responding by flying us more often and spending more within our loyalty ecosystem deepening their engagement with Delta and through continued fleet renewal we are driving incremental margin improvement with more premium seating, lower unit costs, and improved fuel efficiency. March quarter results demonstrate the power of this model. Total revenue of $14.2 billion was a first quarter record and 9.4 percent higher than last year, several points above our initial outlook. Total unit revenue grew by 8.2 percent, with a nearly two-point contribution from MRO. Aston's unit revenue growth was healthy across the board with sequential improvement from the fourth quarter in all regions. Domestic and international unit revenue grew mid-single digits and improved through the quarter with strong performance in both premium and main cabin. Importantly, we saw an inflection in main cabin with the first full quarter of positive unit revenue growth since the end of 2024. Diverse revenue streams represented 62% of total revenue in the quarter, with premium and loyalty growing mid-teens. Remuneration from American Express grew 10% to over $2 billion, led by 12% spend growth on strong acquisitions. Corporate sales grew double digits and set a quarterly record. Performance improved throughout the quarter, with positive growth across all sectors. Turning to our June quarter outlook, we are reducing capacity and taking steps to recapture higher fuel. Our strong brand preference, premium product focus, and actions on capacity position us well to do so. While historically fuel recapture has lagged 60 to 90 days, we are seeing a quicker response with real-time traction in the industry given the pace and magnitude of the move up in fuel. corporate and consumer demand continues to be strong even as we pass through higher fuel cash sales grew mid-teens in march with momentum extending into april across the booking curve and in both premium and main cabin with these dynamics we expect second quarter total revenue growth of low teens on flat capacity growth reflecting double-digit passenger unit revenue growth. This is meaningful acceleration from mid-single-digit unit revenue growth in the March quarter. As with any environment, we will remain nimble, prioritizing margins and return over both the near and long term. In closing, the March quarter demonstrates our commercial advantages, and we are focused on investing to extend our leadership over time. With that, I'll turn it over to Dan to go through the financials.

Thank you, Joe, and good morning to everyone. I also want to recognize and thank our people. This quarter demanded a lot from our teams across the operations. They responded with commitment, teamwork, and an unwavering focus on our customers. In the first quarter, we delivered record March quarter revenue with an operating margin of 4.6% and earnings per share of $0.64 within our initial guidance range. Fuel prices averaged $2.62 per gallon, including a $0.06 benefit from our refinery. This was nearly $0.40 higher than we expected at the start of the quarter, driven by the sharp run-up in March. Non-fuel unit costs grew 6% over prior year, reflecting lower capacity growth than planned and higher recovery costs. On cash, we generated $2.4 billion of operating cash flow after $1.3 billion profit-sharing payment for our people. After reinvestment of $1.2 billion, we delivered $1.2 billion of free cash flow for the quarter. Strong cash generation enabled further balance sheet progress. We ended the quarter with adjusted net debt of $13.5 billion, down 20 percent from last year and gross leverage of 2.4 times. Now, turning to the June quarter outlook. Our outlook is based on a fuel assumption using the forward curve as of April 2nd, resulting in an average price of approximately $4.30 per gallon, approximately double the price we were paying last year. This includes an estimated $300 million benefit from our refinery. Relative to the start of the year, this fuel price adds more than $2 billion of additional fuel expense in the quarter. With these fuel assumptions, the actions we are taking in continued strength and demand, and we expect total revenue to grow in the low teens on flat capacity the prior year. With this, non-fuel unit costs are expected to grow similar to the rate in first quarter, reflecting the impact of our capacity reductions and the continuation of higher crew-related costs. As Ed discussed, improving operational resilience is a top focus, and we are confident in delivering improvement in both operational and cost performance in the second half of the year. Based on those components, we expect a second quarter operating margin of 6% to 8%, with earnings per share of $1 to $1.50. With structural advantages and the actions we are taking, we are best positioned to navigate this evolving environment. The strength of the brand, the resilience of our customers, and a more diversified revenue base provide greater financial durability. Our balance sheet is the best in our history. We are investment-grade at all three credit rating agencies, have reduced our adjusted net debt below 2019 levels, And we have a well-laddered maturity profile, supported by a substantial base of unencovered assets and secured borrowing capacity. Our vertically integrated fuel strategy is a unique differentiator. The refinery directly supplies a portion of our jet fuel needs, and its economics partially offset higher cracks, reducing the all-in price we pay for jet fuel. Before we move to Q&A, I want to highlight the performance of our third-party maintenance, repair, and overhaul business. As we discussed in January, with increased financial disclosure in MRO, breaking out both revenue and costs in the P&L, the MRO revenue in the first quarter more than doubled over the prior year to $380 million on execution by the Delta Tech Ops team. For the remaining quarters of the year, we expect a healthy but more normalized rate of MRO growth, supporting a full-year revenue outlook of $1.2 billion, representing nearly a 50% improvement over last year with expanding margins. In closing, Delta's financial strength transcends the industry and positions us to extend our leadership through times of volatility. reinforcing our advantages and improving the long-term earnings power of the business. Now, with that, I'll hand it back to Julie for Q&A.

Matthew, can you please remind the analysts how to enter the question queue?

Certainly. And at this time, we'll be conducting a question-and-answer session for analysts. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing your question, please pick up your handset. if you're listening on speakerphone to provide optimum sound quality we do ask that all Q&A participants please limit to one question and one brief related follow-up question once again if you have any questions or comments please press star one on your phone your first questions coming from Savi Sith from Raymond James your line is live hey good morning everyone maybe you know the the industry, as you pointed out, has been here to raise fares and back fees.

I'm curious if the mid-team revenue outlook reflects what you're seeing on the books today or includes an assumption that some of those fares and fees will drive acceleration in the back.

Savi, are you on speaker phone? We barely could hear what you were saying. It came across mumbled.

Yes, let me try this. Thank you. Sorry about that. Yeah, so related to kind of this quick action on fees and bag fees here, I was curious if the mid-teens revenue outlook reflects what you're seeing in the book today, or if that includes an assumption that some of those fare increases in fees will drive acceleration in the back half of the quarter.

While we are seeing over the current term, clearly we assumed in that analysis that oil prices were going to stay very high through the quarter, consistent with our fuel assumption. And so there would be more growth anticipated in terms of improved rise going forward throughout the quarter.

Makes sense. And maybe just a follow-up on that, you know, you showed just kind of really strong RASM across the four entities in one queue. I was curious what the general expectations are in two queue and if there was any differences in demand strength or ability to pass through higher costs across those entities.

Hi, Sophie. This is Joe. No, we see actually really good demand right now across all entities. We're going into peak summer for Transatlantic, and that looks very good right now. transatlantic was a was a was a bright spot for the first quarter so now across all the booking curves and across all the uh booking periods we're seeing strong demand helpful thank you thank you your next question is coming from connor cunningham from melius research your line is live everyone thank you uh just again i i totally appreciate you're not speaking to the 2026 earnings at this point.

But when we maybe play back last year, it was a much different circumstance when you did poll guidance. So I was hoping you could just level set a little bit to how you view the year. Clearly, demand is where you think it is. Is it just where jet fuel settles to see where you can start to potentially get back to growing earnings again this year?

Thank you.

Well, Connor, yeah, exactly. We woke up this morning with a very different set of fuel assumptions than we had when we went to bed. And in this environment with this level of volatility, which we don't expect the volatility to stay at this pace day by day as this conflict progresses one way or the other. And so until we have a better sense for where structurally we see oil landing, which we do believe will be higher for longer, not just at the levels we modeled, we'll be in a better opportunity to guide, which I think is a little different than the situation where we were in a year ago where that was more revenue-based and that was a much more difficult wild card. Just on the long-term EPS, you know, your confidence there. I mean, I tend to agree with you. I think that obviously there's a clear foundation for strong earnings quality going forward.

But, you know, in the past, you know, you've seen oil spike, fares follow, and then oil kind of normalize and then fares to kind of follow that. But it seems like it's a bit different as we start to look towards 27. So if you could just walk through the puts and takes of how you see the industry kind of playing out, what you see for Delta to continue to take share and drive margins and durability in cash flows.

Well, I think I mentioned it in my prepared remarks. You know, you have a considerable portion of the industry that has not returned its cost of capital, has not made a profit in years. And going back over the last decade, when we saw consolidation happen, we forget what drove consolidation. What drove consolidation was higher fuel prices back in 2009, 10, 11. And we were the leaders in that with the acquisition of Northwest in 2008. So I anticipate higher fuel prices will cause much more significant structural reform than we've seen over this period. COVID, I think, was a different animal where no one was strong enough to engage in the type of rationalization that was necessary. And as we look forward to building a healthier business for the future, there's a number of business models that I think their owners are going to start questioning whether they continue to commit capital to. And however that plays out, it's going to be a benefit to Delta. Perfect. Thank you.

Thank you. Your next question is coming from Tom Fitzgerald from TD Cowan. Your line is live.

Hi, everyone. Thanks again for the time. Really encouraging set of results. I'm just kind of curious if there's any kind of places where you've seen, whether geographies or customer segments or parts of the cabin, where you've seen more demand elasticity or so far so good and pretty much just broad banked and no pushback against higher pairs.

Hey, Tom, this is Joe. You know, across our network, we've got very strong bookings right now for the second quarter and summer. So in a broad view, we've seen a very strong demand, and especially still in the premium and corporate space. A couple of places that we've talked about before is, you know, point-of-sale Europe has been a little bit weaker. We've seen a little bit of weakness in Mexico leisure, just between the incidents that occurred in Puerto Vallarta, and we've taken capacity actions there. So a couple of hotspots around our network, but overall very broad and broad strength in what we're seeing.

Okay. Okay, thanks. That's really helpful. And then just maybe sticking with international over the long term here, how you're thinking about international margins and then just maybe the mix shift with international in terms of premium versus main. thanks again for the time.

Yeah. On our journey, as we expand our international footprint, we're really pleased with the results and what it does for our total network to ensure we're in the right economies around the world. Our premium demand, it comes from how we're redoing the interiors of our airplanes with seating, with our D1 seats, our DPS. If you look at the aircraft we're taking, you know, closer to 50 percent of that cabin now is premium seating. And what we're retiring is aircraft that are 30 percent premium, and we're actually able to carry a lot more cargo. If you look at our cargo numbers, this quarter we were up eight percent, and that continues to grow a lot from Asia as we've invested in the product. So as we invest in the product, fuel-efficient airplanes, the strength of our domestic network that feeds international, and more importantly, the hubs that we use around the world with our partners really gives us that insulation and our strength.

Your next question is coming from Mike Lindenberg from Deutsche Bank. Your line is live.

Hey, good results. Nice to see you in a difficult environment. Um, Joe, um, your predecessor, you know, had floated the idea of, of segmentation in the premium cabin. It, it looks like one of your competitors is going down that path. Where are you with respect to that? Um, what are some of the gating issues in launching that?

Yeah, Mike, um, we're, you know, as we talked about this, uh, over the, you know, past couple of years of further segmentation we're we're well on our journey um and we're on target for where we want to be by the end of the year with the premium segmentation so for us uh we're we're uh we're full speed ahead on that and we like what we see so far in the segmentation so you can expect uh more for us in the in the next couple of quarters great and then second question just maybe to dan this probably falls under your rule notwithstanding the Strait of Hormuz maybe now open we had been hearing about jet fuel shortages in in parts of the world Asia Pacific maybe Australia down to

25 30 days do you have any issues with sourcing jet fuel you know any any on the any issues on the horizon anything that you're hearing thanks Mike yeah Mike thank you no we have no issues today and we don't see any over the next 30 days or so.

Thank you.

Thank you. Your next question is coming from John Godin from Citigroup. Your line is live.

Hey guys, thanks for taking my question. I was hoping to just maybe explore the conversation around capacity reductions a bit more. Is there anything you guys can just help us with kind of putting some bookends or some dimensions around background back half capacity growth, what the pivot points are, you know, are you guys managing to EPS neutrality or other metrics? Just help us think through that and what the puts and takes might be.

John, hi, this is Ed. As you can appreciate, it's a pretty dynamic environment. I'd say with fuel moving around, that's the biggest driver of some of our decision-making. We have a good line of sight, and Joe can add color as to what we see happening in the second quarter where the capacity is falling out to take out the growth. But as we watch the events over the course of the next month or so, and when we set our summer schedule or finalize the summer schedule, there will be opportunities. And I think it will be heavily dependent on what's happening in the economy, what's happening with respect to demand elasticity, as people have been asking, as well as where fuel prices are.

And, you know, I think, John, when you see $4 to $5, we're targeting capacity in off-peak times. Off-peak for us, if you think about our unit revenue basis, is 15% to 20% less valuable than peak times flying. So when you think about edge-of-day, red-eye flying, those are all, when you think $4 to $5 of fuel, those markets will be under the most amount of pressure. So what you'll see from us is utilization flying, edge-of-day flying. We've done this over and over again when you have situations like this. So it's a very easy amount of capacity to come in and out, and it's one where you want to be more conservative in an environment like this. As I said, we'll see where the rest of the year goes, but I think we'll probably take a downward bias and continue to look at the summer for opportunities.

And to state the obvious, the best type of fuel recapture is not to purchase the fuel in the first place. It's not going to be profitable. So that's at least my bias here.

I would just add, from working closely, and I think all with the commercial teams over time, they just always have this idea of profitability, margins and returns. And they know where to draw the line, and they adjust accordingly.

That makes a lot of sense. Appreciate that color. It's certainly the right tactical playbook. I'm curious if there's a point where it becomes more of a strategic question about the fleet plan, accelerating retirement, getting out of an aircraft type, something like that. Should we be brainstorming the possibility of moves like that, or are we just far away from that?

We are doing that, and you're right, John, on the margin. We lean more heavily into making some of those decisions maybe a little sooner. But I'd say it's probably a bit early for us to announce a new strategic direction, but that's on the table.

Thanks. Appreciate it. Thank you. Your next question is coming from Dwayne Finningworth from Evercore ISI. Your line is live.

Hey, thank you. Good morning. I wonder if you could frame a yield improvement you may be seeing in Pacific ex-China as long-haul flows avoid connecting through the Middle East for a period of time. Are you seeing a surge or maybe still seeing a surge in close-in premium?

Hey, Dwayne, this is Joe. You know, Asia has been a very, I'd say, very durable for the past several quarters. Japan has been an outlier. China has been strong. Incheon, with our partner, has been very strong. We have seen demand of avoiding the Middle East for connections. I'd say our partners probably see more of that as they go through Europe, as they connect more through Europe or connect through Asia. But we can see it as well, and the close-in yields and bookings have been very strong on the business and corporate side.

Thank you. And for my follow-up, just on MRO, hoping you can shed some light on the drivers of the pickup in revenue growth there. Can you just remind us how much of your own engine work your own MRO does? And is the revenue growth acceleration a function of increased capacity investments that you've made over the last couple of years?

A few items I talked about. First quarter was our lowest quarter last year. So we only used the one quarter, I guess, whose low watermark was $140 million. So low benchmark. It relates to, you know, a strong backlog that the team had built throughout 2025 for not only 26, but 26 and beyond. And it's a balance of what the customer's needs are versus our shop capacity. And those things aligned and allowed the team to execute. The work scopes that we worked on were heavier work scopes and had more content associated with them, and it drove the revenue growth. That's why you'll see it sometimes be a little bit lumpy. It's not like, you know, just clock it in at 20% a quarter type thing. You'll see it move around, so that's why the annual growth rate and working towards a 1.2 and about just over 20%, you know, you'll see for the remaining set of the quarters. Okay.

Appreciate it.

Thank you. Your next question is coming from Jamie Baker from J.P. Morgan.

Your line is live. Oh, hey. Good morning, everybody, and one for Joe. So, you know, we all know that the traditional discount airline model is impaired, and, you know, there are a lot of drivers for that. But one of them is clearly the absence, I'm sorry, the advent of basic economy. On CMBC this morning, I had declared corporate is back. So that's the basis of my question. As corporate volumes increase, do you have the capacity to manage that without decreasing basic economy inventory? Or should we assume that corporate recovery for Delta may actually inadvertently rejuvenate some of those smaller competitors that can't earn their cost of capital? I mean, obviously, it's great news for Delta. I'm just trying to take a bigger picture for the industry.

Hi, Gary. Yeah, when I look at our corporate customers and where they book, I think we have plenty of seats for where in the booking curve those customers want to book in all cabins. So I don't think main cabin and basic is flexible depending on the market that we're in, right? Basic is not the same in every market and where we compete. So our inventory teams can change those strategies based on what we see for where the customers are on that yield curve. So I think those are flexible, but we generally always have seats for our closer-in, higher-demand consumers.

And as a follow-up on that, any geographies where you think your corporate share may be at, I don't know, a deficit to where it otherwise should be at this point? I mean, any meaningful difference between, you know, the coasts and the interior, that sort of thing? I appreciate it.

I wouldn't say that. I would think on a year-over-year basis, you know, we look at where our RASM grew for the first quarter. Our coastals were stronger than our core because that's where corporate last year in the revenue side was more impaired. So we've seen the coastals actually very strong for the first quarter, which we were really pleased to see. those are the biggest corporate markets. Some of our biggest clients are in the New York, Los Angeles, Boston, Seattle type market. So that's been really good to see on where that demand came from in the first quarter, kind of showing the resurgence and the durability of corporate.

And to be clear, Jamie, we have gained share over this past year as well as this past quarter corporately so we're not that goes to his point we're not we're not seeing any any signs of weakness at all if anything that's been double-digit just about every sector we follow that's excellent thank you gentlemen appreciate it thank you your next question is coming from Atul Maswari from UBS your line is live good morning thanks for taking my question are you able to provide more color on the second quarter revenue expectations or RASM expectations by yield and load factors?

And then related to that, any second quarter expectations for various geographies would also be helpful.

Yeah. I think on the yield and load factor, as we go to our flat capacity plan for the quarter, you'll see some load factor improvement in probably in all cabins, but mostly it'll come from yield. You know, we've got a recovery from last year at this time where we were the hardest hit on revenue from the tariffs and other various events, and steel recapture. So those are the biggest pieces of where we see yield versus load factor for the second quarter. And around the world, you know, we're still seeing strength, I would say, equally around our system. You've seen the, you know, thing that's really been dragging is mexico leisure as we talked about but we've moved that capacity out uh very quickly after the events uh and that capacity is down for the for the foreseeable future and those customers have actually just moved to different entities of leisure destinations whether it's caribbean or florida so so uh we'll recapture them somewhere else but uh no but i've seen uh i think we'll we'll see it the strength across the board thank that's helpful and uh as my follow-up if oil were to move you know ceasefire proofs permanent oil moves sustainably lower from here and maybe price increases are not fully rolled back in that

scenario do you think delta can drive enough backup upside such that it enables you to achieve your previous full year outlook or do you think enough damage has already been done with the 2 billion incremental fuel cost this quarter that basically makes achieving the previous full year I'll go outside any reasonable realm of possibility.

Atul, this is Ed. We're not in a position, given how dramatic the fuel swings have been, to really answer that. We do expect, hopefully, that fuel settles down. Now, it will settle down, I think, at a higher level than where we have in the plan. So fuel recapture is going to be important no matter what we do. and the degree to which we can retain any of the pricing strength that we talked about from industry rationalization, that will certainly help us boost our margins this year and clearly into next year as well.

Thank you. Good luck with the rest of the year.

Thank you. Your next question is coming from Andrew Dodora from Bank of America. Your line is live.

Good morning, everyone. So the 40% to 50% fuel recapture in 2Q was pretty similar to how we were thinking about it. But I guess what we've debated here is, you know, how this trends into the back half of the year if we're in a higher for longer fuel environment, you know, accelerate, you know, in that scenario. Is that a fair way to think about it? Or, you know, can you help us understand how you, you know, would think about the fuel recapture as we move into the back half of the year?

Our goal is to recapture all the fuel. it's given the the level at which we snapped it that's going to take more than more than the current quarter but we would expect if that fuel level stays intact that we're going to continue to see a much higher percent as we move into summer you know to touch upon the cost side i think you've been highlighting some of these pilot recovery you know issues certainly lingering here into 2Q.

How do you fix that? And is there any kind of concern on those costs maybe being higher as we head into peak summer when the operation is a lot more tightly wound? Thanks so much.

Yeah, as we talked about, we don't have the resilience that we're known for related to that. We know what the drivers of that are. As Ed mentioned, it definitely has the full team's attention and focus we're working on those things uh it's a broad set of changes that we got to go put in place it'll take us a little bit of time here as we work through it uh through the summer and uh there's no doubt when you're flying uh more intensive operation and and as you see with weather uh some of that will be highlighted more um but we expect to make progress on it as we progress through the summer and through the back half of the year great thanks dan thank you your Our next question is coming from Kathryn O'Brien from Goldman Sachs.

Your line is live.

Kathryn O' Good morning, everyone. Thanks for the time. Just anyone on demand, despite quite a bit of geopolitical and macro uncertainty, demand is holding in remarkably well, even in the face of higher fares to help offset fuel. This just feels really different than what we saw happen last year on macro and geopolitical uncertainty. What do you think is driving that difference?

Katie, this is Ed. I said this publicly over the last number of months. I think the higher-end consumer, the premium consumer, is candidly immune or becoming more immune to the headlines and not delaying their investment in the experienced economy, waiting to see what the next headline is going to be on the margin. And I think a year ago at this time, I think people, and not just people, individual, importantly, corporates, were stalled, were a bit frozen by the dramatic nature of the tariff uncertainty. And we hear about tariffs now every day. And sometimes they go up, sometimes they go down. But it's not affecting individuals' lives in a meaningful way. And I think as difficult it is to see what's going on with the conflict in the Middle East, I'm not sure that our premium customers are feeling affected by that.

Okay. So maybe volatility is our new normal. Got you. Maybe, you know, I realize it's really hard to call what's going to happen in the back half of the year and totally understand that. But, you know, maybe just taking the $1.2 billion of free cash flow you produced in the first quarter, and I'm not sure what the free cash flow outlook is underlying your 2Q, but I'm sure you've got something penciled in there. How is first half free cash flow tracking versus your original, you know, $3 to $4 billion full-year target?

It's on track through the first quarter. The second quarter will be impacted from where we expected the quarter is versus our current guide. But that's, you know, you would expect that with the loss in earnings.

Okay, great. Thanks so much for the time.

Thank you. Your next question is coming from Michael Goldie from BMO Capital. Your line is live.

Good morning, and thank you for the question. Your release noted that you're seeing particular strength in corporate demand for premium products. Is this a general market trend, or are there specific Delta initiatives, such as merchandising and working with your corporate clients, to improve that premium uptake?

Hi, Mike. This is Joe. Well, you know, overall, the economy is strong. And so corporate customers are moving, and the first quarter had been a step up from what we saw exiting last year. And so customers are back on the road. Remember last year at this time, we really had a very slow corporate growth as we got into the March and April time period. So it's a great year over year. It's a good confidence in the business, and everything that we hear from our clients is that they're going to continue to travel and travel even more than they did last year. So I think those are good. Most of those are in premium-type cabins and merchandising. You know, they're not in the basic products that we have, but so they're more in our full fare or premium products. And that's been like, you know, as I said, all of our all of the areas of corporate are up double or almost all double digits.

And then as my follow-up, the strength that you're seeing in demand, can you help us understand as we look forward, like how much of that is coming from customers accepting higher fares versus actual momentum on the number of bookings?

I think you've got it on both, right? You've got great momentum. We had great momentum in the first quarter that's carrying in. And when you look at the cash sales, we say we're up 10 and actually up 15% for March. That went out both in short-term periods of booking as well as long-term that people were working on their travel for summer and transatlantic and areas like that. So you've seen it across all areas. And what was really good to see is the close-in bills, which is very strong. So the revenue that's on the books also takes into consideration what we've seen in increases just recently.

Thank you. Thank you. Your next question is coming from Sheila Kyoglu from Jefferies. Your line is live.

Good morning, guys, and thank you. Maybe similar to, and Jamie asked on the coastal hubs, but post-COVID you took share. How do you think about higher fuel and how it changes the competitive landscape, but specifically focusing on international? How do you think about market share opportunities where you're investing the most? And maybe my follow-up would be on how we think about price increases internationally and domestic, were they different, and what are you seeing thus far?

Yeah, Michelle, on the share side, I think we've, you know, we look at the past year, we've done very well on not just maintaining but increasing our share across all entities as we continue to expand into the international regions. I think that the fair changes on fuel are different for domestic and international, but both have to meet their returns is what we're really guiding towards. So whether you're in domestic or international, it's different for both of those entities, but the same intent is to recapture the cost of fuel.

Okay, great. I'll stop there. Thank you. Matthew, we'll now go to our final analyst question.

Certainly. Our final question is coming from Chris Dathalopoulos from Susquehanna. Your line is live.

Good morning. Thanks for taking my question. I want to go back, Ed, to the differentiated and durable theme. It was a quarter or two ago you spoke about emphasizing or growing your loyalty presence or ecosystem in your focus cities. And maybe, I guess, if you could talk about how you're thinking about your brand loyal market share as it relates to your core and coastal hubs not asking about profitability i realize a competitor or competitors of you spend a lot of time debating that but given where fuel prices are and then contextualizing what you said a quarter or two about ago about growing uh the loyalty piece within the focus how you're thinking about this concept of brand loyal share as it relates to your core and coastal hubs in this environment? Thank you.

Hi, Chris. This is Joe. I'll take that. You know, we've been very purposeful in how we put our capacity and how we build that brand loyalty in a city. And I think we're very fortunate that we have a very loyal following and the Delta brand is loved in actually the hubs and the cities that we choose to compete. So a lot is how much more we can offer our customers and how much more they pay us. And I think that's been on the loyalty side as well as, you know, you think about segmentation, the ground products we put in, not only the air products, but we've been upgrading the fleet in our coastal and our focus cities as well as our core hubs. But the investment we've made in all of our cities is a testament to what we get back in that brand loyalty from our customers. So we're going to continue on that path. I think that's, you know, in my opening comments, that was one that we're really focused on, is how to deliver more of that brand strength in a city, which also gets more loyalty and also allows customers to be able to spend more on Delta. Great.

I'll keep it to one. Thank you.

That will wrap up the analyst portion of our Q&A, and I'll now turn it over to Tim Mates to open the media portion of the call.

Thank you, Julie. Matthew, if you would, please, as we transition to the members of the media, if we have any, would you please remind people how to access the call queue, please?

At this time, we'll be conducting a Q&A session for media questions. If you have any questions or comments, please press star, then 1 on your phone. Please hold while I pull for questions. Thank you. Your first question is coming from Leslie Joseph from CNBC. Your line is live.

Hi, good morning, everyone. Wondering if the capacity plans that you have now, or flat capacity, rather, is affecting your hiring at all for 2026 and maybe into 2027? And then also United has made the executives have made some comments about trying to catch up to Delta in terms of profit and including getting some more customers and more up-for-grab markets like L.A. And just wondering if you could talk about some of the initiatives Delta has from Hopper over the next few months and years that you think will keep your competitive advantage going.

Hi, Leslie. You squeezed in like eight questions in one sentence. I'm impressed. No, we have not adjusted our hiring plans. Again, as I said, the situation is fairly fluid. We've largely completed hiring on the front line side for the summer season anyway, so no changes there. We love competition, and I think it's good, as I mentioned to you yesterday, that we have other carriers that are replicating our model, and we will continue to do well. We know the Delta brand is the strongest brand in our industry. We know our market share in places where we compete heavily, including, most importantly, the coast, continues to take an outsized share. And we'll continue to keep our investments going strong to keep those customers happy, particularly our premium customers.

Thank you so much.

Thank you. And once again, for media questions, if you have any questions or comments, please press star and 1 on your phone at this time. Please hold loyipole for questions. Thank you. There are no further media questions.

Great, Matthew. Thank you very much. That will conclude today's call, then.

Thanks, everyone, for joining.

Thank you. That concludes today's conference. Thank you, everyone, for your participation today.