Proposed Credit Caps Risk Credit Availability; Delta Bets on Premium International Travel

Key Quotes

"We just finished a year where we saw some pretty significant challenges, whether it was the Liberation Day impact on consumer sentiment, shutdown of the government, and the airspace in the latter part of the year. So we wanted to make sure we had a little bit of wiggle room, some caution as to how we thought about projecting the year out."

Ed Bastian explains that Delta Air Lines approached their 2026 projections with caution due to significant challenges in the previous year. Bastian highlights that this caution was intended to provide flexibility in their financial outlook.

"I think it's early. I think it's premature. This is not our business; this is the financial services world and the banking climate. I think the banks that have already come out and spoken about it are expressing a tremendous amount of concern. I understand it would have required legislation, is what I'm told, and we know the challenges of getting anything through Congress these days."

Ed Bastian expresses that it is too early to assess the impact of proposed credit card rate caps on Delta's loyalty program. Bastian notes that this issue falls within the financial services sector and that banks are already voicing significant concerns about potential legislative hurdles.

"I think the main reason is the demand set for the premium seats and the premium product that we offer has continued to be at a record high. The more we look at the health of the consumer, we talk about the K. We're at the top end of that K in terms of who our consumer is. When you have a high demand set, that's what drives pricing strength and that's what drives the growth that we've seen over the last several years."

Ed Bastian attributes the growth in Delta's premium cabin to consistently high demand for their premium offerings. Bastian explains that their target consumer is at the upper end of the economic spectrum, which drives pricing strength and overall revenue growth.

"When we look at that growth for us, international is a big part of our growth strategy, and we announced yesterday a big new order for the Boeing Dreamliner. We're very happy about that, excited about that. People think about our industry, they come to me, they say, 'Where's the future for travel going to come from?' We're 100 years old. It is international. When you think about only one in five people in the world have ever stepped foot on an airplane, that means you have to go new places. You have to find new opportunities to grow and expand, and that's going to be the statement of the second century of flight."

Ed Bastian identifies international expansion as a key growth strategy for Delta, citing a recent order for Boeing Dreamliners. Bastian emphasizes that the future of air travel lies in reaching new markets, given that a significant portion of the global population has yet to fly.

"It's possible. John, I think that the bigger issue for a lot of folks that I've talked to is that interchange bill, that Credit Card Competition Act. There is not a sense that we could see in Congress a cap on those credit card interest rates. We've examined this, there's no executive authority, even using emergency authority that exists, to put this through. But a lot of investors are nervous for a couple of reasons. One, when Donald Trump says something, oftentimes he goes out with the most extreme position and then negotiates into something that will be considered reasonable later."

Edward Mills suggests that while a cap on credit card interest rates may not be feasible, the interchange bill, or Credit Card Competition Act, presents a more significant concern for investors. Mills notes that investors are apprehensive due to the potential for extreme positions taken by Donald Trump during negotiations.

"Yeah, Ann Marie, back when I worked on Capitol Hill, one of the signature bills that I worked on for a couple of years was the CARD Act. It's hanging up here on my wall, which implemented all the consumer protections for around credit cards. So this is something I've worked on for more than 20 years, and what I've seen is there's not a lot of support for rate caps because there are concerns about credit availability. However, on interchange, it's a completely different fight. You have two really well-heeled lobbies, the retailers versus the banks."

Edward Mills draws a distinction between credit card rate caps and interchange fees, highlighting the differing levels of legislative support and lobbying efforts. Mills explains that while rate caps face concerns about credit availability, interchange fees involve a significant battle between retailer and banking lobbies.

"You know, part of the reason that Donald Trump was able to get elected in 2016 and again in 2024 was tapping into populism. There was a crossover between Bernie Sanders voters and folks that have voted for Donald Trump in the general election. It is not a surprise to me that he has embraced some of these conversations, and the credit card 10% cap, that's a Bernie Sanders bill with Josh Hawley, a Republican from Missouri. But he is tapping into things that he knows are popular with voters."

Edward Mills explains that Donald Trump's electoral success is partly due to his appeal to populist sentiments, which resonate across different political demographics. Mills points out that Trump's engagement with issues like the credit card rate cap aligns with popular concerns, drawing parallels to policies previously supported by figures like Bernie Sanders.

"The U.S. and China used to codepend on one another, or still do codepend on a lot of resources. If we're moving to a world of decoupling, and we're in a sort of a détente right now up until the time of these elections and the beginning of 2028, we've effectively got two years for these countries to secure as much resource as possible, not just physical demand, but also just the line of sight on future supply."

Alexander Altmann describes the current global economic landscape as one of decoupling between the U.S. and China, with a two-year window for both nations to secure essential resources. Altmann emphasizes that this period is critical for securing not only current demand but also future supply chains.

"What's really important about that is that at the moment, the U.S. is relying on over 50% imports on about 47 critical metals and resources. It's not just rare earths, it's everything: copper, lead, lithium, electrification systems, aluminum, everything. If that is your base case, then can we see more noise when it comes to geopolitics? The president a week ago, or a little more than a week ago, captured Maduro. He's now talking about Greenland, and let's not exclude Ukraine as well, massive on critical minerals and resources."

Alexander Altmann highlights the U.S.'s significant reliance on imports for critical metals and resources, extending beyond rare earths to include essential materials like copper and lithium. Altmann suggests that this dependency makes the U.S. vulnerable to geopolitical instability, citing recent international developments.

"So we've been as a team very