A Delta Air Lines plane takes off at Reagan National Airport in Arlington, Virginia, on Dec. 24, 2021.Eric Lee | Bloomberg | Getty ImagesFor United Airlines CEO Scott Kirby, there’s his airline, his carrier’s main rival, Delta Air Lines, and then everyone else.Delta and United accounted for more than 86% of the profits posted by the seven largest airlines last year. Airline margins are notoriously thin, less than 4% last year, compared with close to 20% for big U.S. companies, according to the Airlines for America industry group. Already, the top four U.S. carriers — Delta, United, American and Southwest — accounted for about three-quarters of domestic capacity.But beyond size, Delta and United’s networks and focus on premium travel will help them weather a challenging year better than their competitors, analysts say.”One thing that’s becoming even more clear … is the strength of the two brand loyal airlines really winning and everyone else losing,” Kirby said on the carrier’s quarterly call on Thursday.”It’s hard to say that he’s wrong,” said Melius Research airline analyst Conor Cunningham.And things are looking up for the rest of the year, Delta and United’s CEOs have said. Kirby told CNBC’s “Squawk Box” on Thursday that United’s pared-down 2025 forecast has some upside because of a pop in demand this quarter after on-again-off-again tariffs and other challenges bogged down bookings earlier this year.An air traffic controller shortage that sparked flight cuts at United’s major hub of Newark Liberty International Airport in New Jersey is taking a bite out the airline’s second and third quarter profits.[embedded content]United and Delta stock moves compared with the S&P 500.Cheap seatsAirfare is falling this year, even in what are traditionally peak travel months, with too many coach class seats in the market. Domestic travel demand, especially from price-sensitive consumers, has been weaker than the lofty expectations airline executives had at the start of 2025.Airfare fell 3.5% in June from a year earlier while inflation overall rose, according to the Bureau of Labor Statistics.”The summer is generally never on sale, and the summer is heavily on sale right now,” Southwest CEO Bob Jordan told CNBC in late June.Delta and other carriers have said they will scale back their capacity plans after the summer travel season, which wanes around mid-August, but even making money during peak periods is challenging this year.”Simply put, a portion of the industry is drowning; incapable of producing profit, even during the summer peak,” JPMorgan Chase airline analyst Jamie Baker wrote in a note on Thursday. “It strikes us as patently logical to expect these franchises to throw as much capacity at peak demand as they can muster, in hopes of potentially breaking above the waterline for just a brief gasp of air.”It can’t be amazing forever. What goes up comes down. This is the airline industry.”Conor CunninghamMelius Research airline analystBoth Delta and United have trimmed their 2025 outlooks. (Southwest, American and Alaska report quarterly results next week.) But an emphasis on international travel, as well as premium seats and loyalty programs, is boosting both carriers.United on Wednesday reported a 7% drop in the second quarter in domestic revenue per available seat mile, a gauge of airline pricing power. The carrier also said it saw a 4.5% drop in that figure overall, though international unit revenues weren’t down as much, thanks in part to a boost from trans-Pacific flights like those to tourists’ latest obsession: Japan.Delta’s domestic revenue was down 5%, and down 3% overall.Even some trans-Atlantic trips showed signs of oversupply in the market as feverous demand for European trips post-pandemic settles down and inbound tourism to the U.S. drops.”It can’t be amazing forever. What goes up comes down,” said Melius’ Cunningham. “This is the airline industry.”But both United and Delta pointed to strength in their premium cabins, where seats are are several times more expensive than a coach fare, as well as in their loyalty programs. Delta said its revenue from its lucrative American Express partnership rose 10% from last year in the second quarter to $2 billion, and premium-class revenue was up 5 …
