Delta Continues to Enjoy Solid Operating Margins Despite Higher Costs

We believe Delta is the highest-quality legacy carrier because it has been able to attract high-yielding business travelers through its product segmentation and credit card partnerships, primarily with American Express. Delta’s five-cabin segmentation strategy allows high-spending travelers to purchase premium options when they are able to. Frequently, business travelers use miles from a cobranded credit card to upgrade flights when their company is unwilling to pay a premium price. American Express pays top dollar for the miles given to these business travelers, as Delta-cobranded cards alone account for about a fifth of American Express’ loan book. We’re confident that Delta can continue expanding this higher-margin business after the pandemic.