The airline industry hasn't come close to making a full recovery from the COVID-19 pandemic yet. International travel restrictions continue to weigh heavily on long-haul travel, while business-travel demand has just started to bounce back in a meaningful way. That said, demand is finally improving at a steady pace, led by strong leisure-travel demand within the U.S. and to nearby international destinations (like Mexico and the Caribbean). This nascent recovery enabled Delta Air Lines (NYSE: DAL) to record strong sequential improvement in its financial results last quarter, cruising past its own forecasts -- not to mention analysts' expectations. A step in the right direction Delta Air Lines posted adjusted revenue of $6.3 billion for the second quarter. While that was 49% lower than its Q2 2019 revenue, Delta still beat its April forecast of a 50% to 55% decline on that basis, as well as its updated June forecast for a 50% to 52% revenue drop. Moreover, adjusted revenue surged 76%, compared to the first quarter of 2021. Long-haul international travel continued to drive a disproportionate amount of Delta's revenue declines. Transatlantic passenger revenue plunged 85% from two years ago, while transpacific passenger revenue plummeted 87% over that period. By contrast, domestic revenue fell 45% and Latin America revenue declined 36%. Cargo revenue came in 35% higher than Q2 2019, while loyalty-program revenue slipped just 9%. Image source: Delta Air Lines. The improving revenue environment helped Delta comfortably beat its earnings forecast. Last month, CEO Ed Bastian projected that the full-service airline would report an adjusted pre-tax loss between $1 billion and $1.2 billion for the second quarter. Ultimately, its adjusted pre-tax loss totaled $881 million. This translated to an adjusted loss per share of $1.07. The analyst consensus had called for a loss of $1.40 per share. Under generally accepted accounting principles (GAAP), Delta actually posted a sizable profit of $652 million ($1.02 per share) last quarter. The company booked a $1.5 billion pre-tax benefit from government payroll-support grants in Q2, driving this discrepancy. Encouraging cash flow trends Importantly, Delta Air Lines generated $195 million of free cash flow last quarter -- even after backing out $2.5 billion of cash payroll-support grants it received from the federal government. Average daily net cash ticket sales exceeded management's internal forecast for the quarter by 20%. To be fair, bookings for summer travel tend to drive seasonally strong cash flow in the second quarter. Still, returning to positive free cash flow roughly a year after the pandemic peaked last spring represents an impressive achievement. Profitability is likely to continue improving rapidly as business travel returns and international borders reopen. Meanwhile, Delta will carefully manage capital spending in the near term. Earlier this week, it confirmed its plans to buy 29 used Boeing 737-900ERs and lease seven Airbus A350-900s at bargain prices. This will allow the airline to continue restoring its free cash flow over the next couple of years, while also simplifying its fleet and replacing aircraft it retired last year. Image source: Delta Air Lines. Onward and upward Delta highlighted several other metrics in its earnings report to demonstrate its growing momentum. First, corporate travel volumes doubled from 20% of pre-pandemic levels to 40% of pre-pandemic levels between March and June. Second, even though Delta is still mainly carrying leisure travelers, demand in its premium cabins is recovering faster than main cabin demand. In short, many leisure travelers have been willing to pay extra for an upgraded experience. Third, Delta Air Lines' high-margin revenue stream from its credit card partner American Express recently eclipsed pre-pandemic levels. Remuneration from American Express is poised to grow rapidly over the next couple of years, turbocharging Delta's earnings and cash flow recovery. Fourth, despite growing concern about the COVID-19 delta variant in recent months, booking activity continues to rise. Of course, that could change in the future. Nevertheless, the robustness of the current recovery should give investors increased confidence that Delta Air Lines' results will continue to improve, even if new variants periodically lead to higher COVID-19 case numbers. 10 stocks we like better than Delta Air LinesWhen our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Delta Air Lines wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of June 7, 2021 American Express is an advertising partner of The Ascent, a Motley Fool company. Adam Levine-Weinberg owns shares of Delta Air Lines. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.Source