A major regulatory win handed cross-border aviation a boost on August 20, when the U.S. Court of Appeals for the Eleventh Circuit vacated the Department of Transportation’s order terminating the joint venture and antitrust immunity (ATI) between Grupo Aeroméxico, S.A.B. de C.V. (NYSE:AERO) and Delta Air Lines, Inc. (NYSE:DAL). The ruling keeps their decade-old partnership fully intact. While regulatory relief benefits both legacy carriers, examining their Q2 2026 financial performance reveals which airline is truly operating from a higher position of strength.
Pixabay/Public Domain
Financial Performance: Scale vs. Margin Recapture
Both Delta Air Lines and Grupo Aeroméxico navigated elevated jet fuel costs during the quarter, but Delta delivered substantially stronger operational efficiency, profitability, and cash-flow generation. Delta Air Lines, Inc. (NYSE:DAL) posted record Q2 operating revenue of $17.7 billion, up 14% year over year, alongside a 9.4% GAAP operating margin and $1.9 billion in operating income. Its diversified revenue streams accounted for 61% of total top-line growth, supported by a 17% increase in premium sales and a 16% rise in American Express remuneration to $2.4 billion. Even after absorbing a 77% surge in fuel expense to $4.4 billion, or $3.93 per gallon, Delta maintained its full-year adjusted EPS guidance of $6.50 to $7.50 and free cash flow expectations of $3 billion to $4 billion.
Grupo Aeroméxico, S.A.B. de C.V. (NYSE:AERO) also delivered record Q2 revenue of $1.5 billion, up 12.6% year over year, supported by a 43% premium revenue mix and a 10.5% increase in TRASM to 16.0 cents. However, operating costs rose 30.3% to $1.4 billion, largely constrained by an 80% increase in fuel prices to $4.20 per gallon. Although Aeroméxico recovered approximately 75% of its $219.3 million incremental fuel cost through disciplined pricing, its operating margin compressed to 4.6%, with operating income of $67.9 million. Adjusted EBITDAR margin reached 17.9%, or $264.2 million.
Overall, Delta maintained superior financial performance, combining stronger margins and free cash flow generation, while Aeroméxico faced greater pressure on profitability from rising operating costs and fuel expenses.
Bull and Bear Cases
Delta Air Lines’ bull case is supported by its strong brand loyalty, high-margin premium and corporate revenue, expanding credit card partnerships, and continued balance sheet deleveraging. These factors support long-term earnings growth and reinforce Delta’s leadership position within the airline industry. However, the bear case centers on persistent non-fuel cost inflation, with CASM-Ex rising 6.8% to 14.09 cents, alongside the risk of a broader macroeconomic slowdown in travel demand. Reflecting these concerns, Raymond James lowered its price target on Delta to $98 from $104 on August 24 while maintaining an Outperform rating, citing relatively low valuation volatility.
Grupo Aeroméxico’s bull case is driven by its preserved cross-border ATI partnership with Delta, expanding international capacity, strong pricing power supported by the Mexican peso, and a net debt-to-EBITDAR ratio below 2.0x. On the downside, the company remains heavily exposed to volatile fuel prices, while CASM-Ex inflation, which reached 10.0 cents and increased 12.3%, could continue to pressure profitability. Its operations are also more vulnerable to regional economic shifts, creating additional risk for earnings and travel demand.
Insider Monkey’s Hedge Fund Data Analysis
Institutional conviction strengthened across both Delta Air Lines and Grupo Aeroméxico in Q2 2026. Delta was held by 75 hedge funds, up from 68 in Q1, reflecting increased institutional participation. Berkshire Hathaway, led by Warren Buffett, remained the company’s largest holder, with 57.32 million shares valued at approximately $5.37 billion following a 44% increase in its position.
Grupo Aeroméxico also experienced growing institutional interest, with the number of hedge funds holding the stock increasing to 30 in Q2 2026 from 25 in Q1.
Conclusion & What Investors Should Watch Next
While the Eleventh Circuit ruling removes a major structural overhang for both carriers, Delta Air Lines, Inc. (NYSE:DAL) remains the better financial pick for investors due to its superior earnings power, diversified revenues, and institutional backing. Moving forward, investors should watch whether the DOT attempts a revised legal challenge to the joint venture, alongside Delta’s execution toward its $2.00–$2.50 Q3 EPS target and Grupo Aeroméxico, S.A.B. de C.V. (NYSE:AERO)’s projected margin expansion in Q4 2026.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years
Disclosure: None. Follow Insider Monkey on Google News.
Hedge Fund Resource Center