Fuel Price Surge Forces Delta to Cut 2026 Profit Outlook Despite Strong Demand
Theo Al Jazeera English
Delta Air Lines cut its 2026 profit forecast despite strong travel demand, citing a $6 billion jump in fuel costs tied to US-Iran tensions. The airline now expects adjusted EPS of $5.10–$5.60, down from July's $6.50–$7.50 range, sending shares lower.
Delta Air Lines has cut its 2026 profit forecast despite high travel demand, as fuel costs escalate across the aviation industry.
In its third-quarter earnings report released Friday, the Atlanta-based carrier said it expects full-year fuel costs to rise by an additional $6 billion. The airline attributed the increase to prolonged tensions between the United States and Iran, which have sent global fuel prices soaring.
More broadly, US airlines have spent nearly $43 billion on fuel in the first eight months of this year, up $13.2 billion from the same period a year earlier.
In the stock market, Delta lowered its full-year profit forecast to adjusted earnings per share of $5.10 to $5.60, down from the $6.50 to $7.50 range issued in July. The midpoint of the new range is below the average analyst estimate of $5.46, according to LSEG data.
Delta shares fell during intraday trading as the week's session drew to a close, slipping 1.1% from Friday's opening price. Still, the stock is up nearly 18% year to date, despite a 4.4% decline over the past five sessions.
Chief Executive Ed Bastian said the airline has raised fares by about 20% this year and insisted those prices can hold even if fuel costs cool.
Delta is the first major US airline to report results and typically weathers price swings better than rivals thanks to a Pennsylvania refinery it bought in 2012.
Despite higher fares, demand remains strong, with 60% of fourth-quarter flights already booked. Delta also announced several new international routes, including Seattle–Tokyo (Japan), Boston–Venice (Italy) and Austin–Paris (France), set to launch next year.
Bastian told The Wall Street Journal that holiday bookings are also holding up and the premium segment is growing, with premium-seat revenue up 18% in the quarter from a year earlier.
Overall, premium flights can deliver big gains for leading airlines, and prices in that segment are rising. According to the monthly report from the Airline Reporting Corporation, which tracks ticket transactions, the average fare for premium seats at major carriers is up 11% year over year.
Lower-income consumers, however, are pulling back on spending. According to a University of Michigan survey released Friday, US consumer sentiment is weakening.
“Overall, sentiment among lower-income consumers and those with smaller stock portfolios fell sharply this month, groups with fewer resources to weather rising prices,” Joanne Hsu, the survey's director, said in a statement.
Delta's report lands as the US summer travel season wraps up, following indications that lower-income travelers will cut back on trips because of higher prices. In May, according to a Deloitte report, 51% of Americans earning under $100,000 a year said travel would be among the first things they cut.
United Airlines is the next major carrier due to report results, with figures expected after markets close on October 20. Like Delta, United shares fell on the stock market, losing 0.8% from Friday's opening price.
