Delta Air cuts profit forecast as US$6 billion fuel-cost surge outweighs fare gains
Fuel expenses rose 62% from a year earlier to US$4.1 billion, blowing past its forecast by more than US$500 million
Delta Air Lines has reduced its annual profit forecast by nearly a quarter, cutting it to between US$5.10 and US$5.60 per share from the previous range of US$6.50 to US$7.50. This downgrade comes after fuel expenses surged by 62% to $4.1 billion in the third quarter, exceeding the company's July forecast by more than $500 million.
The increase in fuel costs is largely attributed to the ongoing Iran war, which has driven jet fuel prices higher worldwide. Delta expects the fuel cost increase to reach $6 billion in 2026, surpassing earlier projections. The company now anticipates third-quarter adjusted earnings of $1.72 per share, slightly missing analysts' average estimate.
Delta's CEO, Erik Snell, highlighted the company's ownership of a refinery outside Philadelphia, which generates $700 million in profit this year and partially offsets fuel costs. However, the refinery cannot fully protect against rising fuel prices, as costs are expected to remain elevated for some time. Analysts warn that further fare increases may test passengers' willingness to continue spending, as airlines have already raised fares substantially this year.
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