The American airline industry is experiencing a fundamental restructuring—one that's creating clear winners and losers in ways not seen since deregulation. Through the first nine months of 2025, Delta Air Lines and United Airlines accounted for nearly all U.S. airline profits, leaving competitors scrambling to adapt to a market that increasingly rewards premium offerings over low fares.

The Numbers Tell the Story

Delta reports fourth-quarter earnings Monday morning, and expectations are high. Bank of America forecasts first-quarter 2026 revenue growth of approximately 5.3% and has set a price target of $80—up from $74—reflecting confidence in the carrier's premium strategy.

United Airlines is nipping at Delta's heels, with analysts forecasting a 25% earnings per share spike for 2026 as its aggressive international expansion matures. The carrier maintains a Buy rating with a price target raised to $130 from $120.

CEO Ed Bastian captured the mood in Delta's most recent guidance: "Looking to 2026, Delta is well positioned to deliver top-line growth, margin expansion and earnings improvement consistent with our long-term financial framework."

"After years of post-pandemic volatility, 2026 is shaping up to be a year of stabilization—but the divergence between premium leaders and budget laggards is the defining story of the market."

— CNBC airline industry analysis

The Premium Travel Boom

What's driving the divergence? In a word: premium. Delta's bet on wealthy Americans driving the economy is working. Premium seats are set to overtake main cabin for the first time in history as a percentage of the carrier's total revenue—a remarkable shift in the airline business model.

Recent corporate survey results indicate that roughly 90 percent of companies expect their travel volume to increase or remain steady in 2026, five percentage points higher than last year's survey. This corporate demand flows disproportionately to carriers with strong premium cabins, airport lounges, and loyalty programs.

The economics are compelling. Premium passengers generate multiples of the revenue per seat compared to economy travelers, while requiring only modestly higher costs. This margin advantage compounds as airlines invest in premium products that attract high-value travelers.

Budget Carriers Face a Steeper Climb

American Airlines and budget-friendly carriers are facing a more challenging path. While American operates the highest frequency of domestic flights, it continues to struggle with lower profit margins and a heavier debt load than its Atlanta-based rival.

Analysts see potential upside from better economics related to the Citi card partnership, raising 2026 revenue growth forecast to about 7.5%. However, American's higher leverage and thinner margins warrant a lower valuation compared to Delta and United.

Spirit Airlines' ongoing bankruptcy proceedings underscore the stress facing the low-cost model. The carrier rejected a $400 million rescue offer from Frontier over the weekend, deepening its second bankruptcy in as many years.

The Fuel Tailwind

Adding to optimism for 2026, jet fuel prices are set to plunge. Brent crude is projected to drop toward $62 per barrel in early 2026, providing a much-needed margin cushion for all carriers—but particularly benefiting those with premium pricing power.

Goldman Sachs commodities strategists are forecasting full-year prices for Brent and WTI at $56 and $52, respectively, well below levels that would pressure airline economics. JPMorgan sees similar numbers, with Brent at $58 and WTI at $54.

For Delta and United, lower fuel costs translate directly to improved margins on already-profitable routes. For struggling carriers, cheaper fuel provides breathing room but doesn't address the fundamental competitive disadvantages they face.

What Monday's Earnings Will Reveal

When Delta reports before the market opens Monday, investors will focus on several key metrics:

  • Premium revenue mix: Continued growth in first-class and business-class bookings would validate the strategic pivot
  • 2026 guidance: CEO Bastian's outlook commentary will set the tone for the entire sector
  • Corporate demand trends: Business travel recovery remains essential to premium economics
  • Fuel cost hedging: How Delta has positioned for 2026's expected fuel price declines

The Zacks Consensus Estimate for fourth-quarter earnings is $1.55 per share, though Delta has an impressive history of beating estimates—surpassing consensus in each of the trailing four quarters with an average beat of 8.9%.

Investment Implications

For investors, the airline sector's bifurcation creates clear opportunities. Delta and United offer exposure to the premium travel boom with relatively attractive valuations—Delta trades at roughly 6.0 times its projected 2026 EV/EBITDAR.

United, expected to generate over $2 billion in free cash flow in 2026, offers exposure to accelerating unit revenue as its international expansion matures. The stock has substantial upside if earnings estimates prove conservative.

The contrarian case for American—with its high leverage but improving operational metrics—exists but requires greater risk tolerance. Budget carriers should probably be avoided until a clearer path to profitability emerges.

The Bigger Picture

The airline industry's restructuring reflects broader themes in the American economy. Premium experiences command growing premiums as wealth concentration enables affluent consumers to pay for quality. Budget alternatives face margin compression as they compete for a shrinking pool of price-sensitive travelers.

Delta and United have positioned themselves on the right side of this divide. Monday's earnings report will provide the first major data point of 2026 on whether their premium bets continue to pay off.