Delta vs. United: Could Falling Oil Prices Set the Stage for an Airline Stock Comeback in 2027?

Investors weighing Delta Air Lines (NYSE:DAL) against United Airlines (NASDAQ:UAL) face an interesting opportunity as oil prices retreat following a period of heightened geopolitical tensions. With travel demand remaining resilient despite elevated airfares, lower fuel costs could provide a meaningful boost to airline profitability heading into 2027.

Both airlines are well-positioned to benefit, but their business models and financial profiles differ. With fuel costs potentially easing, the question for investors is which airline is better positioned to translate strong travel demand into sustained earnings growth.

The case for Delta Air Lines

Delta operates as a major global carrier, positioned among the most prominent industrial stocks, with a strategy centered on premium travel, international routes, and its growing loyalty business. Its partnership with American Express (NYSE:AXP) provides a substantial source of revenue beyond ticket sales, while its Delta TechOps division generates additional income through aircraft maintenance services.

In FY 2025, Delta generated $63.4 billion in revenue, an increase of approximately 2.8% year over year. Net income reached $5 billion, resulting in a profit margin of 7.9%. More recent results highlight continued strength in consumer travel demand. In the third quarter of 2026, passenger revenue increased 15% year over year, with premium ticket revenue growing 18%. Meanwhile, revenue from its American Express partnership increased 15%, reinforcing the importance of Delta's diversified business model.

Delta also maintains a relatively strong financial position. At the end of 2025, its debt-to-equity ratio stood at approximately 0.7x, while its current ratio was 0.4x. The company generated $4.6 billion in adjusted free cash flow during the year and continued reducing debt. Although its liquidity position requires attention, Delta's profitability, premium customer base, and growing loyalty business provide a solid foundation for continued growth.

The case for United Airlines

United Airlines operates one of the world's largest airline networks, connecting travelers across six continents with a particularly strong presence in international markets. Its MileagePlus loyalty program, supported by a long-standing partnership with JPMorgan Chase (NYSE:JPM), provides an additional source of revenue beyond ticket sales. The company continues investing in aircraft, premium seating, and onboard technology to strengthen its competitive position.

In FY 2025, United generated $59.1 billion in revenue, an increase of 3.5% year over year. Net income reached approximately $3.4 billion, resulting in a profit margin of 5.7%. More recent results demonstrate accelerating demand. In the third quarter of 2026, revenue climbed 17% to $17.9 billion, supported by strong premium and corporate travel demand. Passenger revenue increased 17.6%, while the company reported particularly strong growth across its domestic and international routes.

United ended 2025 with a debt-to-equity ratio of approximately 1.6x, excluding operating leases, and a current ratio of 0.6x. Free cash flow totaled approximately $2.7 billion, providing capital for continued fleet investment and debt reduction. Although its relatively high leverage remains a concern, United's expanding network, strong travel demand, and improving revenue momentum provide opportunities for continued growth.

Risk profile comparison

Both Delta Air Lines and United Airlines face industrywide risks, including volatile fuel prices, economic slowdowns, rising labor costs, and intense competition. High fixed expenses also make profitability sensitive to fluctuations in passenger demand.

Delta faces additional risks from its reliance on premium travel demand and its Monroe Energy refinery, where operational disruptions or unfavorable refining margins could pressure profitability.

United carries greater financial leverage and substantial fleet expansion commitments. Its extensive international network also increases exposure to geopolitical disruptions, while dependence on regional airline partners and aircraft deliveries introduces additional operational risks.

Valuation comparison

United currently trades at a slightly lower Forward P/E and P/S ratio, suggesting it may be the more attractive option for value-oriented investors.

Valuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy for 2027?

Both Delta and United look attractive heading into 2027. Despite elevated airfares and higher fuel costs, consumer demand for air travel has remained resilient, particularly among premium and business travelers. Meanwhile, the recent decline in oil prices could provide meaningful relief to airline operating expenses if the trend continues.

From a valuation standpoint, the two stocks are closely matched. Delta trades at 14.8 times forward earnings and 0.7 times sales, compared with United at 14.6 times forward earnings and 0.5 times sales. United offers a slight discount, alongside stronger recent revenue growth and opportunities to expand its international network.

However, I would give Delta the edge. Its premium travel strategy and lucrative loyalty business provide diversified revenue streams, while its stronger profitability and lower financial leverage offer greater flexibility if economic conditions weaken. United's higher debt burden and substantial fleet investments introduce additional risk, particularly if fuel prices rebound or travel demand slows.

For investors looking toward 2027, Delta looks like the better buy, although both airlines could benefit from sustained travel demand and lower fuel costs. With valuations relatively similar, Delta's stronger financial position and more consistent profitability offer a more attractive balance of risk and potential returns.

JPMorgan Chase is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. RJ Fulton has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Express and JPMorgan Chase. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.