Delta Air Lines missed Wall Street earnings estimates for the first time in two years and cut its 2026 profit forecast as jet fuel costs surge. CEO Ed Bastian says travelers keep booking despite higher fares, even as net income fell 47% from a year earlier.
Delta cut its full-year earnings outlook to between $5.10 and $5.60 a share on an adjusted basis, down from the $6.50 to $7.50 range it gave in July. The airline also lowered its free cash flow outlook for the year to $2.5 billion, from as much as $4 billion expected in July.
Fuel costs drive the downgrade
Jet fuel prices have surged since the Iran war started in February, pushing up airlines' second-largest cost after labor. Gulf of Mexico jet fuel prices have almost doubled to $4.34 on Thursday from $2.19 a year earlier, according to FactSet.
Bastian said fares have continued to rise as Delta passes along much of a $6 billion increase in fuel costs this year. According to CNBC, Bastian said: "The consumer response continues to be quite strong", adding it spans all channels and cabins of service.
Earnings missed Wall Street estimates
Delta reported third-quarter adjusted earnings per share of $1.72, below the $1.75 Wall Street expected, based on consensus estimates from LSEG. Adjusted revenue came in at $17.59 billion versus $17.67 billion expected.
Net income fell 47% to $756 million, or $1.15 a share, from $1.42 billion, or $2.17 per share, a year earlier. Adjusting for one-time items, Delta posted earnings of $1.76 per share. It was the first time in two years that Delta missed estimates.
Revenue still climbing
Operating revenue jumped 21% in the third quarter to $20.19 billion. Adjusting for sales from its refinery, maintenance business and profit-sharing, revenue rose 16% from the previous year to $17.59 billion.
Premium revenue, which has become a larger portion of Delta's total sales, grew 18% in the third quarter to $6.82 billion, while main cabin sales rose only 12% to $6.8 billion. Delta forecast a 20% increase in revenue for the fourth quarter over the same period last year, more than the 16% rise in the third quarter.
Source: CNBC
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