Delta Air Lines slashed its annual profit forecast by nearly 25 percent on Friday as surging fuel costs swamp strong travel demand, pushing its quarterly fuel bill up 62 percent to $4.1 billion and triggering a sharp drop in pre-market trading.
Delta Air Lines reduced its annual profit forecast by nearly 25 percent on Friday. The Atlanta-based carrier now expects an adjusted annual profit between $5.10 and $5.60 per share, down from its July projection of $6.50. The new midpoint of $5.35 falls below the average analyst estimate of $5.46 tracked by LSEG, according to financial reporting.
The carrier’s shares dropped 3.5 percent in pre-market trading following the announcement, marking the airline’s first downward profit revision of the year.
Fuel Bill Surges While Margins Contract
For the third quarter, Delta reported adjusted net income of $1.134 billion, a 2 percent increase from the previous year, leaving adjusted earnings per share at $1.72 against an adjusted revenue of $17.59 billion, which came in below Wall Street expectations of $1.75 per share and $17.67 billion in revenues according to CNBC. On a GAAP basis, net income fell 47 percent to $756 million, or $1.15 per share, compared to $1.42 billion, or $2.17 per share, earned in the same period a year earlier. Operating margins contracted as fuel expenses climbed.
Middle East conflict and attacks on Russian refineries have intensified pressure on refined jet fuel and crude oil markets globally. Transport statistics show American carriers spent $42.9 billion on fuel during the first eight months of the year—an increase of $13.2 billion over the prior year despite consuming slightly less volume. Meanwhile, Delta’s total revenue jumped 21 percent on an annual basis to reach $20.19 billion, or 18 billion francs, while adjusted profit before taxes increased by 1 percent to reach 1.662 MdUSD.
Chief Financial Officer Erik Snell attributed the forecast cut entirely to energy costs during a press briefing, pointing to crude and refined jet fuel prices that have climbed since the summer months. Delta anticipates its annual fuel bill will increase by approximately $6 billion, or 5.35 billion euros, compared to last year.
Philadelphia Refinery Buffers Delta Against Soaring Fuel Prices
Unlike its major domestic competitors, Delta owns and operates a refinery near Philadelphia that provides a partial financial buffer against soaring petroleum prices. The facility is projected to generate $700 million in profits this year, with revenues at the refinery climbing 76 percent in the third quarter.
Despite an anticipated benefit of 40 cents per gallon from the refinery, Delta expects its fuel cost of goods to reach $4.25 per gallon in the fourth quarter, up from $3.61 in the third. Snell noted that fuel prices are expected to remain elevated for an extended period.
Erik Snell told Boursorama, Ultimately, fuel prices will decline.
Passenger demand remains resilient as Delta prepares for the final stretch of the year. With nearly 60 percent of fourth-quarter bookings already secured, the carrier projects total revenue growth of about 20 percent compared to the previous year.
Delta targets a free cash flow for the full year 2026, alongside plans to repay debt and reduce its adjusted gross leverage ratio to roughly 2.2 times by year-end, while also anticipating an adjusted profit per share between $1.15 and $1.65 for the fourth quarter. The carrier previously posted an adjusted annual profit projection of $6.50 per share in July.