Some subscribers have emailed and texted to say Scott Kirby’s very detailed statement about American rebuffing his desire to acquire the airline is an indication that Kirby wishes to move on. “They declined to engage and instead responded by publicly closing the door,” Kirby said in a statement filed Monday with the SEC. “And without a willing partner, something this big simply can’t get done.”

If you think he’s done, you don’t know Kirby.

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The numbers were not pretty. The parent company of Alaska, Hawaiian, and regional airline Horizon reported a net margin of -9.6 percent on revenue of $3.3 billion. The group spent an extra $100 million for fuel than it had budgeted, paying an average cost of $2.98 per gallon, about 14 percent higher year-over-year.

Overall demand was robust, but the group faced some revenue challenges as it limped to a loss equal to $1.69 per share. During what CEO Ben Minicucci called “once in a generation rainstorms” in Hawaii, with rainfall during two weeks in March reaching 3,000 percent of normal levels in some regions, passengers called off many trips, driving “a spike in cancellations and near-term book away,” chief commercial officer Andrew Harrison said on Tuesday’s first quarter earnings call.

Customers might have shifted to Mexico, but Puerto Vallarta (where Alaska is the top U.S carrier) had its own problems. “Civil unrest leading up to the spring break travel period had a meaningful impact on demand as well,” Harrison said.

Alaska and Hawaiian remain leisure-oriented airlines, and these two regions account for roughy 30 percent of the group’s capacity — enough to cost the company nearly a point of RASM in the first quarter.

While the worst is over, Harrison warned of an overhang into April and May, a major headwind for a company that needs massive revenue to counter rising costs. It predicts its second quarter fuel bill will be $600 million higher than it planned for, and it expects to pay an average of $4.50 per gallon.1 “As of today, we are recovering approximately one-third of incremental fuel costs,” Harrison said.

With fuel costs expensive (and fluctuating), the company has suspended EPS guidance, telling analysts there are too many potential outcomes to make a concrete prediction about prices. Nonetheless, whatever the price-per-gallon, executives said they’re optimistic they can pass on some expenses to customers.

“Some of these fare increases are sticking,” Minicucci said. “We’re getting an average of $25 [extra] on an average fare, give or take, depending on which market it is.”

To gain pricing power, the group is removing flights in Mexico and on late-night departures in high-frequency markets. Though North America capacity should fall slightly year-over-year in the second quarter, systemwide capacity is expected to rise 1 percent, because of new long-haul flights from Seattle.

How big of a problem is all of this?

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If only Wizz Air executives had listened to their nemesis, Ryanair’s Michael O’Leary, who spent years gleefully suggesting that Wizz’s Abu Dhabi joint venture would fail. Perhaps O’Leary’s bombastic rhetoric was inappropriate, but his message to Wizz was accurate: ULCCs typically succeed when they fly packed airplanes on short stage lengths and turn airplanes quickly to leverage their cost advantage.

Unfortunately, Wizz chose a different path with its 2019 joint venture with the Abu Dhabi Developmental Holding Company. The sovereign investor wanted a low-cost option to connect Abu Dhabi with Europe, the Middle East, Asia, and Africa, both to bring in tourists and to make it easier for laborers to travel back and forth. Meanwhile, Wizz wanted entry into a market where it (presumably) would have less risk, since it only owned 49 percent of Wizz Air Abu Dhabi.

I don’t think you need as much experience as O’Leary to ask how this airline, which began flying in January 2021, would be a good idea. Long flights to Europe, Asia, and parts of Africa always were going to challenge the ULCC model, and while it’s true that passengers tend to find cheap fares, the Wizz brand wasn’t (and probably still isn’t) well known in the Middle East.

With little going right, Wizz Air Abu Dhabi closed Sept. 1. When they ended the 12-aircraft operation, executives blamed several challenges they had not expected, including high maintenance costs, engine issues, operational reliability problems, and government restrictions on which routes it could fly.1

With the benefit of hindsight, we know that shutting down the airline was a good idea. Six months later, Israel and the United States attacked Iran, and Iran retaliated in part by targeting the UAE with missile and drone attacks. By then, only about 4.7 percent of Wizz’s capacity flew to the Middle East, mainly on longer hauls from European bases to Saudi Arabia, the UAE, Israel, and Jordan.

“A lot of people say, ‘You look really smart,’” Wizz chief commercial officer Ian Malin told me in an interview last month. “Certainly we didn’t know what was going to happen, but one of the reasons for pulling out of that airline … was because every time there was political instability, geopolitical sorts of stuff, the capacity got all messed around.”

I like Malin, and not just because he’s such a loyal listener to The Air Show that he listened to it last year during the Wizz Air Skopje half marathon. I found him candid in discussing Wizz’s recent stumbles, and I appreciated how he led me through his network changes, like bolstering operations in Italy and Eastern Europe. I thought he chose his words carefully only once — when he responded to O’Leary’s very public vendetta against his employer, which goes beyond Abu Dhabi.

“Michael can say all sorts of stuff, and he will,” Malin said. “We don’t really care. We know that there’s a lot of good things he does. He should focus on what he does well and not trying to identify what we do poorly.”

Here are some highlights of my discussion with Malin.

Wizz Abu Dhabi did not go well. Engines were a big issue.

Wizz Air Abu Dhabi confused more airline insiders than just O’Leary. Even with the boost from the sovereign wealth fund, it was never clear why this airline, based far away and with a brand unfamiliar to most local customers, was the right one to introduce low-cost travel to Abu Dhabi.

Malin told me he didn’t see it that way. Yes, he said, by the time he arrived in 2022 as CFO (he became CCO just a couple month ago), he knew it would fail. But he said the premise of the Abu Dhabi airline made sense and argued that its failure mostly was related to things outside the airline’s control.

Engines (no surprise there) were a major problem. Wizz received its first A321neo in 2019 and like a lot of airlines, it found that these engines weren’t as reliable to operate as their predecessors.

”The GTF engine, in the brochure, was expected to last 9,000 or 10,000 cycles between intervals,” he said. “That was sort of how the things were costed. It turns out that the durability of those engines was an issue.”

That has been a network-wide problem. But the harsh climate of the Middle East came with its own penalty — engine maintenance is much more expensive in certain countries and in certain climates. When airplanes fly a majority of their sectors in hot desert environments, manufacturers charge more to fix engines.

”In power-by-the hour arrangements, once the engines hit a certain threshold of the number of takeoffs in hot and harsh environments versus total takeoffs, then they attract a higher rate," Malin said.2

Next, Wizz, again like many competitors, grounded airplanes and increased the number of spare engines it needed because of the Pratt & Whitney powdered metal issue.

Wizz Air Abu Dhabi also struggled operationally because of its small size. Wizz has more than 200 airplanes, and with most concentrated in Europe, it benefits from economies of scale. Wizz Air Abu Dhabi lacked that advantage, as do Wizz’s remaining long routes from Europe to the Middle East.

”When things go really wrong, you’re miles away from established maintenance providers,” Malin said. “There are maintenance vendors, but we don’t really have a lot of volume with them. So we get rack rates versus volume rates. And then we have crews out of base, and they time out. We don’t have a lot of crews standing by, so you’ve got to ferry them in. You’ve also got to ferry in replacement aircraft. And we’re flying to and from Europe, so we get hit really hard with these EC 261 compensation claims.”

Was the revenue from Abu Dhabi not big enough to outweigh the costs?

No, it was not, and Wizz CEO József Váradi has blamed politics.

When Wizz started 22 years ago, it mostly moved cheaper labor from Eastern Europe to wealthier markets in Western Europe. Váradi, one of the airline’s founders, bet that Wizz could replicate its early model in Abu Dhabi, connecting laborers between the UAE and their homes.

That might have worked in many markets, but the big ones were to be India and Pakistan. Váradi told the Telegraph in July that access to these markets was included in Wizz’s initial memorandum outlining its UAE expansion, but never came to fruition.

”We got designated by Abu Dhabi, and we started working with India and Pakistan, and both of them approved our designation," Váradi told the Telegraph. “But at that point Abu Dhabi changed its mind, and they decided to remove our designation and hand that over to Etihad."

Malin said no other markets offered the same revenue opportunity, particularly once the airline realized it had to earn a price premium because of its increased operational costs. The India and Pakistan flights would have been high-volume and high-frequency routes that could have made a lot of money given the traffic flows.

”We were then having to pick markets that didn’t have the kind of volumes we [needed] to replicate what was happening in Europe,” Malin said. “Everything then swirled together into a bad combination.”

Now it’s back to basics

Wizz is now doing what most airlines (ahem, JetBlue) do after an expensive failure — return to basics. For Wizz, that means focusing on Italy and Eastern Europe.

After Malin became chief commercial officer, his first big moment came in Palermo, where he announced a new short-haul base, including domestic routes in Italy. “We were doing domestic already, but we are just going to do a lot more on short sectors,” he said.

Since then, Wizz has further expanded in Italy. Earlier this month it opened its seventh base in the country, with two aircraft in Turin set to fly 16 new routes to eight countries. Wizz said it will have 40 aircraft based in Italy and will remain the nation’s second-largest airline, with about 11 percent market share.

The key to Italy, along with revenue opportunities, is the length of the sectors. Wizz will fly Turin to Rome up to 11 times weekly, a distance of about 286 miles. It’s a classic ULCC route — a quick flight with tight ground time and lots of ancillary opportunities (people still need to check bags on short flights.)

The Middle East operation lacked those advantages. For a long time, Wizz was flying Abu Dhabi to Vienna, a 2,300-mile sector that ate up a lot of fuel and crew time. Not every new route from Italy is as short as Turin to Rome, but on the whole, Wizz should fly a lot more customers than it ever did in Abu Dhabi.3

”For every sector that we had to reallocate, we've created 1.4 sectors,” Malin said. “You're going to see our seat capacity go up and our sector productivity go up as a result of the shorter stage length."

Wizz likely will resume some longer flights from Europe to the Middle East that were not part of the UAE operation but were suspended due to the war. But Malin said the Middle East network likely will have some tweaks, calling out Israel, where Wizz historically has had a large operation.

”We had, I think, like triple daily from Budapest to Tel Aviv, for example,” he said. “Do I really need three times a day, if it’s going to be disrupted? Probably not.”

What about Eastern Europe?

In its home base, Malin said he’d like Wizz to grow up as an airline. While the carrier once just moved workers around, its customer base has become more diversified, while the passenger experience hasn’t changed much.

Wizz doesn't want to follow Frontier (another Indigo Partners airline) in adding a first class (it prefers its small blocked-middle product called Wizz Class), but it wants to treat customers better.

”What we need to do now is understand the nuance behind our customer segmentation,” he said. “We’re seeing a much larger segment of leisure travelers, especially now that Eastern Europe is getting more wealthy. The third-largest buyer of holiday homes in Spain were the Poles, after the Brits and the French last year. And so you see a different demographic coming through our network.”

Business travelers are also increasingly common, and Malin said he wants to prioritize schedule frequency and depth. He doesn’t want popular business routes to be only flown twice or three times a week.

”I want to be the airline that people think about as their daily driver,” he said. “[I want them to say,] ‘The Wizz flight to Warsaw leaves at this time or these times every day, and they never change that time.’ The problem is, I think, ULCCs tend to fiddle around too much with their network design and their schedule design. No one ever [knows] what days these planes are leaving. I want to fix that."

Consistency is expensive because even robust business markets have weaker days and times of year. But in flattening the schedule, Wizz might gain more pricing power.

”We have this scale and the market share to be price makers instead of price takers,” he said. “That’s really the opportunity that I see in front of me.”

What will Wizz do with its A321XLRs?

Good question. You’ll remember that Indigo Partners made a splash at the 2019 Paris Air Show by committing to 50 Airbus A321XLRs for four portfolio airlines. Initially Wizz was to receive 20, but in 2021 as part of a larger order, it increased its count to 47.

Now it has very little need for them.

”By the time we realized that we were no longer doing Abu Dhabi, and we were no longer going to be pursuing that particular product, the aircraft were being built, and so we were able to convert as many as we could to Neos, but we’re stuck with 11 at this point,” Malin said.

Wizz took its first XLR last year and has tried to allocate them to long sectors between Europe and the Middle East. But it doesn’t have that many of those. Malin said he’s open to new long routes that test the airplanes’ range, but only if their economics suggest they’ll be winners. Barring that, he’s taking a conservative approach with the XLRs.

“Otherwise, they’re just going to be Neos,” he said. “They’re going to be Neos with bigger fuel tanks, because there are situations, sometimes, depending on the season and the winds, where we are forced to tech stop, even in the Neo.”

On shorter routes, the XLR is less efficient than a Neo. However, Malin spun it a different way, reminding me the XLRs are more fuel efficient than the airline's A321ceos, which are gradually being retired. “As fuel goes up, that will broaden the gap,” he said. “But let’s hope that fuel doesn’t stay up.”

The XLRs also should open opportunities for charters, including to the United States.

”We have permission to do charters to the U.S., which is actually a pretty neat piece of paper,” he said. “We’re going do some of those for the World Cup that’s coming this summer, but only if someone charters the plane, and pays for the dead leg, and pays us up front, so we know what our profits are going to be.”

I asked Malin, who is from New England and often returns to Maine, whether he wants to launch scheduled flights to his home country.

“There are better ways to commit commercial suicide,” he said.

The fuel crisis could have been worse

Wizz is 57 percent hedged on fuel for its 2027 fiscal year, which began April 1 — a decision that makes Malin, who negotiated these hedges as CFO, look like a genius.

But since I usually follow U.S. airlines, which do not hedge (Southwest was the last holdout), I asked why Wizz uses them. Airlines pay a premium for hedges, and in many years, they lose money. Some carriers lose big money.

Malin said he understands the rationale, and told me it’s a hot topic at Wizz headquarters, since Indigo Partners (which is still a major shareholder) is a U.S.-based company.

”Before my time, there was a decision not to hedge, and that called us out dramatically during the Russia-Ukraine invasion, and so we started hedging again after I took over as CFO, and we’ve been following that methodology religiously,” he said. “We continue to hedge day in, day out, and so we just smooth out the impact.”

Wizz’s problem during the Russia invasion was not necessarily the absolute cost of fuel, though it was expensive. The issue was the relative cost compared to Ryanair and other ULCCs. If Ryanair and Wizz sold fares at the same price, Wizz might lose money, while Ryanair would profit.

“You have to understand your competition in order to help you make the hedging decision,” Malin said. “If we didn't have to, I don’t think we would, because ultimately, you’re paying a price to somebody for that protection. And the banks that we deal with are all big boys, and they don’t do this for free.”

I asked Malin if he is reconsidering his hedging policy. Now all hedging airlines look brilliant. But the math doesn’t lie: Over the long term, hedging rarely provides a net benefit. If he didn’t hedge, might Wizz have an advantage over Ryanair in each year fuel prices dropped?

Maybe. But he told me it’s not worth it.

“If I wanted to gamble, I could go find a different profession,” Malin said. “I’m in the risk management business."

That’s all for today. I’ll be back later this week with a story about U.S. airline earnings. I have heard some interesting things are going on among U.S. carriers.

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I checked in with American’s corporate communications team and learned that American now has a different approach to how it approves confirmed travel for competitors. While it will give tickets in advance in some circumstances, it now does so on a case-by-case basis and not nearly as often as before September, when it had a more liberal policy. More often than not, the answer is no, except for joint venture partners, because they’re not really competitors.

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However, some airlines elsewhere lack such optimism. Last week, I spent time in Auckland with Air New Zealand CEO Nikhil Ravishankar,1 and I learned he’s treating this situation far differently than Ed Bastian, who has told investors that Delta should recover all of the run-up in fuel within a couple of months. Before this crisis, Air New Zealand already had raised prices to cover its increased costs (like airport charges), and Ravishankar said he’s not sure how much more his market can bear.

“The world is volatile, and so it’s tempting to use the term unprecedented against every crisis we see,” Ravishankar said. “Some qualify as unprecedented crises, and some don’t. This is as unprecedented and as existential, I think, as it gets.”

How bad is it?

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That's a story for another time, because on Tuesday, JP Morgan held its annual airline conference in Washington, D.C. Insiders look forward to it because Jamie Baker doesn’t cozy up to CEOs with canned questions they have already answered 10 times. He can make executives look dumb or inept, but they must show up anyway, because he’s so influential.

Today, I will focus on how top executives from the four U.S. global network carriers handled Baker’s1 aggressive questioning. All are feeling a pinch from fuel prices, (United expects to pay about $400 million more in the first quarter than expected) though CEOs from what I’m now calling the Big Four — Alaska, United, Delta, and American — expressed optimism they’ll recover costs by raising fares.2

We won’t know if they can for several months. However, I think three of the four CEOs did a nice job of communicating why their airlines have enough strengths to attract motivated customers who will pay more.

The fourth airline might do OK too. But the CEO of that airline couldn’t tell Baker why his carrier had a moat that would protect it. It’s a potential problem as a carrier without a competitive advantage might struggle if demand wanes.

Which CEO struggled to define his moat? Read on to find out. And stay for nuggets from each of the four presentations.

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“When I accepted this role, the board gave me a clear mandate to enact change at our company,” Jimmy Dempsey (the airline’s former president) told analysts during his first earnings call as CEO.

Importantly, Dempsey promised to prioritize cost more than his predecessor. I found it odd that Biffle loved to argue that Frontier would win long term because the lowest cost always wins, and yet Frontier’s costs kept rising. Last year, CASM ex-fuel increased 10 percent to 7.41 cents. That might have been excusable had Frontier increased its unit revenue, but the opposite happened — RASM decreased by 1 percent compared to 2024.1

Now, while Dempsey will retain some of Biffle’s revenue-generating ideas (including adding new premium seats and focusing on loyalty), he’ll hack the airline’s costs more harshly than his predecessor. He told analysts he’ll achieve his goals through “network optimization, productivity enhancements, and other efficiencies.”

Perhaps most key: Dempsey, who worked at Ryanair before joining Frontier as CFO in 2014, wants to fly more hours daily.

Here are some of the more interesting things I learned from Frontier’s call.

Did the Ponzi scheme finally fall?

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United Airlines has removed its order for 45 Airbus A350s from its long-term fleet plans amid a contractural dispute with Rolls-Royce, the only company that makes engines for the airplane, according to a new filing.

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It has become a running gag, but it's no joke: You can learn a lot about an airline’s priorities based on the quality of the cheese plate it sells in economy class (or if it sells any at all). And as you might recall, while I enjoyed flying Hawaiian Airlines before Alaska acquired it, Hawaiian’s cheese plate was a disgusting medley of self-stable offerings, pumped with enough preservatives to make it last, well, forever.

When I interviewed new Hawaiian CEO Diana Birkett Rakow last month, I asked her whether she had fixed this error by adopting Alaska's fruit and cheese plate. It's the industry's best: a selection of perishable cheeses paired with (usually) crunchy apple slices and plump, juicy grapes. Alaska's customers have loved it for years, because it's delicious — a true marvel of airline catering.

Absolutely not, she said.

"The cheese plate is a signature Alaska brand item," she said. "It doesn't belong on the Hawaiian airline brand."

Wait, what? These two airlines are owned by the same company and fly under a single operating certificate. Their parent, Alaska Air Group, has promised investors it will wring at least $500 million in synergies from its acquisition by 2027, and part of that will come from joint procurement.1

Why spend any money to design and fulfill two different cheese plates?

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But I am impressed at how quickly JetBlue — not an airline known for its alacrity — is staking its claim to the South Florida market. Despite launching 20 new routes in roughly the last six months, including St. Maarten, Pittsburgh, and New Orleans, and adding frequency on many others (such as Atlanta, Hartford, and Cancun), JetBlue is finding consumers are paying solid fares.

“Bookings are strong right now,” JetBlue president Marty St. George said on the company’s fourth quarter earnings call last week. “And I think what I’m especially excited about is we’ve seen a nice recovery of leisure customers, and frankly I cannot talk enough about how pleasantly surprised we’ve been with the speed of the adoption of our new capacity in Fort Lauderdale.”

JetBlue has been the sad story of the industry for the past six years as better-run airlines have plucked its customers in New York and Boston. With no real strongholds anywhere, it again struggled in 2025, posting a net loss of $602 million on total operating revenues of $9 billion.

Now JetBlue senses an opening in Fort Lauderdale — not far from American’s Miami hub — and JetBlue is throwing a lot of capacity at it. By July, JetBlue will fly 37 percent more seats and 28 percent more ASMs than one year earlier, according to Cirium data.

I know what you’re probably thinking: JetBlue’s plan in South Florida is merely a move to win share at the expense of Spirit, so JetBlue finally can be No. 1 somewhere. That’s what I wrote in October.

But maybe I was wrong?

What if JetBlue has bigger plans?

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Just one hour before Isom met with analysts on Tuesday to discuss fourth quarter 2025 results, United released its plans to fly 750 daily departures in Chicago this summer, fulfilling the promise Kirby made last week to draw “a line in the sand” at O’Hare, where the two airlines battle for gates. Analysts always were going to ask about it, but with United’s timing, Earnest guaranteed that Isom would have to spend considerable time addressing American’s loss-making strategy in Chicago.

Some CEOs2 could have handled that. But while Isom can be a good communicator (as he was a year ago after the crash of American Eagle 5342), I’ve noticed that he must prefer to read or memorize talking points for earnings calls. Most executives do that, but Isom seems so wedded to them that he can sound ridiculous when more than one analyst asks about the same topic — something that happened on Tuesday.

Confronted with multiple questions about Chicago (and how much money American intends to lose there), Isom flopped. Rather than meet the issue head on, Isom fell back on platitudes (“pleased with what we see so far,” he said in one response) that were never going to persuade analysts. I almost felt sorry for the guy, ambushed again by Kirby and United’s team.

This could just be another isolated communications error by Isom in a career full of them. But it might be more than that. As he struggled to communicate why he’s fighting so hard in Chicago, I wondered if Isom might not have much time left as CEO.

If he wants to save his job, I think he needs to come up with a more complete narrative about why he’s using so many resources on a fight in Chicago that he might not win. If he can’t — and he lets Kirby continue to define the narrative — Isom will keep looking overmatched. And overmatched CEOs rarely have much job security.

Here are some things that went wrong on American’s call, along with some thoughts on why it matters.

This was an ugly earnings call

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I’m keeping it simple today, with a tidy summary of United’s fourth quarter earnings call. As you probably know, United had a very strong fourth quarter (though not as robust as Delta’s). It posted a pre-tax margin of 8.6 percent; for all of 2025, United earned a pre-tax margin of 7.3 percent, about the same as 2024.

United’s top executives congratulated themselves on this showing, noting that the airline still produced $10.62 in earnings per share (up slightly year-over-year) despite some pain points: unexpectedly poor demand in last year’s first quarter, a significant meltdown in Newark during the second, and a very long government shutdown in the fourth that disproportionately hit revenue at Dulles. “If we talk about acts of God in this industry, we got walloped,” CFO Mike Leskinen told analysts.

Executives said they don’t expect those dynamics to repeat this year, and they are seeing no signs of a slowdown. Demand is strong, especially among business customers, and they are pleased with the size and scope of their mid-continent hubs, after spending much of the past seven years building them up.

If there’s a drag on earnings, it might be in Chicago, where United is wrapped up in an expensive fight with American. But Scott Kirby, in typically colorful language, made clear he’ll spend whatever it costs to win.

Let’s get into the highlights from the call.

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Dear readers,

I’m not sure I can sugarcoat it: American Airlines had a really tough summer at Dallas/Fort Worth. Only about 61 percent of flights arrived within 14 minutes of their scheduled time in July, and the airline struggled to transfer connectin…

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I know many of you read my earnings call summaries for the shots I take at executives who share overly rosy predictions and then fail to hit them.1 I just want to say up front that I can’t deliver on that today because Delta is a very well-run company that consistently meets its key financial targets, including during a very choppy 2025. (However, if you did come for a bit of snark… right before I published this newsletter, I learned a piece of internal United Airlines news that will satisfy you, as Andrew Nocella made a *very* interesting temporary hire. Read to end of this newsletter for that.)

On Tuesday, Delta reported earnings that should (again) lead the U.S. industry: full-year 2025 pre-tax income of $6.2 billion, with a pre-tax margin of 9.8 percent. Its free cash flow2 — which Wall Streeters sometimes argue is a better metric than net income — reached a record $4.6 billion.

For the fourth quarter — traditionally not a strong period for U.S. airlines — Delta had a pre-tax margin of 9.5 percent, up almost 2 points year-over-year. Free cash flow in the final three months of the year reached $1.8 billion.

We will wait to see if the Delta revenue machine slips in March after Glen Hauenstein retires and Joe Esposito (who will have the title of chief commercial officer) takes over. Esposito made what I think was his earnings call debut on Tuesday and promised no material changes to commercial strategy — something I’m sure analysts (who generally endorse Delta’s moves) appreciated.

Esposito steps in at an auspicious time. Executives on Tuesday said demand for air travel is strong, citing improved corporate revenues (up 8 percent in the fourth quarter), robust premium demand (up 7 percent), and growing loyalty income. Add that to the goodness of industry consolidation (Allegiant and Sun Country intend to merge, and something needs to happen with Spirit), and lots of things seem to be going Delta’s way.

Delta’s guidance backs that up. Though the first quarter is often weak, Delta predicted it will turn a small profit, with earnings per share of 50-90 cents and an operating margin of 4.5-6 percent. For all of 2026, Delta expects to grow its earnings per share by about 20 percent (to $6.50-7.50), with about $3-4 billion in free cash flow, after it invests about $5.5 billion in the airline.

Let’s turn to highlights from the Delta call, including why it ordered Boeing 787s, why it intends to add some Asia flights, why it has some concern about how the government may treat credit card programs, and why it is moving slowly as it tests a basic-style extra-legroom fare.

And yes: also that United news.

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Over the last couple of years, whenever I would run into Sun Country CEO Jude Bricker at a conference or cocktail party1, I'd ask him whether he wanted to buy Spirit, almost as a running gag. Usually, he'd respond by saying that the only logical combination would be Sun Country and Allegiant: the only two U.S. leisure-focused carriers that fly older airplanes on less-than-daily routes.

To be clear, I never sensed that Bricker was telling me Sun Country would merge with Allegiant — just that no other partner would make sense. So I can’t say I was shocked on Sunday when the two airlines announced their merger. I was surprised to learn that Allegiant was doing the acquiring, moving to buy Sun Country in a cash-and-stock deal worth about $1.5 billion, a figure that includes Sun Country’s $400 million in net debt. The deal could close as soon as later this year.

Even though Allegiant is a bigger company, I thought Bricker — who loves a deal and was COO at Allegiant until 2017 — would be the acquirer, perhaps with a strategic partner. Yet Bricker is stepping aside. He will join Allegiant's board, but he otherwise has no long-term employment commitment; Greg Anderson will remain Allegiant CEO, with Bricker acting as an integration advisor.

I think this deal, if approved, is a strong combination between two well-run companies that know what their customers want, and have proven they can make money serving them. If we eventually see a Frontier-Spirit merger (no sure thing, as Spirit merely could disappear), that transaction would unite two wounded airlines. But Sun Country is among the more profitable U.S. airlines by operating margin, while Allegiant has told investors that its airline-only EPS for all of 2025 will hit $4.35. Neither carrier is struggling, and they'll probably be stronger together.

Allegiant will get two new business segments (charter and cargo), cheap mid-life airplanes, a motivated customer base in Minneapolis, and new loyalty program members. Meanwhile, Sun Country now has a way out of a problem that insiders have flagged for some time: it has very few options for growth.

Let's look closer at why this was probably the best outcome for both companies.

Sun Country was out of ideas

Sun Country reported an operating margin of 9.9 percent in 2024 and 12.1 percent in 2023. These are big numbers in this industry. Competitors salivate over “double-digit margins” — and yet most of my readers barely talk about the company. I see two reasons why.

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