Delta Air Lines just made its boldest bet since the pandemic | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Delta Air Lines is going into 2026 with a message that Wall Street doesn’t typically hear from airlines: Stay disciplined, keep the premium engine running, and let the cash flow do the talking.

After Bank of America met with Delta CFO Dan Janki following the company’s earnings report, it reiterated a buy rating with a price target of $80. DAL stock closed Friday, Jan. 16, at $70.43, implying an upside of 13.6%.

But the rating wasn’t the most intriguing part.

It was what Bank of America believes Delta is working toward: free cash flow and balance-sheet flexibility. This is even if management is being very careful with its short-term guidance.

Delta Air Lines just reminded investors what separates survivors from winners.

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Delta is cautious yet confident about 2026

Bank of America said that Delta’s management team is definitely being cautious about how much money the airline will make in 2026.

Delta’s guidance for 2026 EPS is between $6.50 and $7.50, which is in line with Bank of America’s estimate of $7.30 and the Street’s estimate of $7.26 (as mentioned in the note). In other words, despite a strong year of business, Delta did not significantly alter its guidance.

The bank thinks that management is reacting to changes in the economy in 2025, but not in a way that makes it seem like demand is breaking apart. Bank of America said businesses and consumers have “grown used” to volatility, and that high demand for luxury products is still a critical support.

Bulls keep saying that Delta is a favorable investment because of its premium theme. If the sector gets bumpy, airlines that have a better mix of high-yield consumers may do better than those that rely too much on cheap flying.

Bank of America also said the industry’s capacity would be good in the first half of 2026. This might enhance prices and unit revenue if supply remains reasonable.

Delta’s MRO business is “small,” and that’s why it could surprise

The maintenance, repair, and overhaul part of Delta is not usually the primary story. But Bank of America is telling investors to look at it again, since the unit is going from “nice-to-have” to “real contributor.”

Delta’s focus on its fleet had caused Maintenance, Repair, and Operations (MRO) income to stagnate at approximately $800 million for a few years.

The company has changed the way it does business more recently, and Bank of America points out that there is a rising backlog, including a 10-year deal with UPS that was referenced in the summary.

The numbers that Bank of America gives make the section interesting.

Delta thinks MRO will expand by 20%, CNBC reported.
Margins are expected to rise from about 9% in 2025 to the mid-teens in the coming few years.
Even if quarterly results are “bumpy,” the annual margin trend will become more steady over time.

Bank of America goes even further and draws a profit bridge: With 20% growth and 15% margins, MRO’s operational profit could reach $200 million in 2028, up from $76 million in 2025.

That kind of higher-margin, service-style earnings stream can be important for an airline. While it’s not a complete solution, it aids in preventing results from becoming excessively volatile as ticket prices increase.

The real bull case for Delta includes free cash flow, low leverage, fleet discipline

Why does Bank of America still believe in its buy thesis? Because of cash.

The company said it was impressed that Delta made $4.6 billion in free cash flow in 2025, even though the economy was unstable. Bank of America thinks that in 2026, Delta will see an additional $3 billion to $4 billion in free cash flow, even though the airline will start paying taxes at a mid-single-digit rate.

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And the punchline is what it means for the balance sheet: Bank of America thinks Delta could have a net leverage of only 0.5x by 2028 if it makes more money in 2027 and 2028, thanks to constant yearly capital spending and retiring 20 to 30 planes a year.

The company says Delta has set itself apart from competitors over time by sticking to a premium-focused approach, controlling capital spending, and ensuring numerous income sources (including loyalty and MRO), all of which have led to a cleaner balance sheet.

The subtext is apparent for investors: Delta doesn’t need perfect economic conditions to thrive; it only needs to keep making money and stick to its plans.