Delta Air Lines has lowered its full-year 2026 earnings projection, citing persistent jet fuel price increases, and reported third-quarter results that missed analyst expectations. The adjustment marks the first time in two years that the carrier has failed to meet Wall Street’s earnings forecasts.
In a statement released Friday, Delta revised its adjusted earnings per share outlook for the year to a range of $5.10 to $5.60, a significant reduction from the $6.50 to $7.50 estimate provided in July when fuel costs were lower. Consequently, the airline also trimmed its free cash flow guidance to $2.5 billion, down from the $4 billion projected earlier in the year. Fourth-quarter earnings guidance similarly fell short of analyst estimates.
The downgrade comes as the airline industry grapples with elevated energy costs following the outbreak of war in Iran in February. Jet fuel represents the second-largest expense for airlines after labor. Despite these headwinds, Delta CEO Ed Bastian emphasized that consumer demand has remained resilient across all service cabins and geographic markets.
“The consumer response continues to be quite strong,” Bastian said, noting that fare levels are trending upward as the company passes through much of the $6 billion increase in fuel expenses incurred this year. “We’re seeing it across all channels, all cabins of service, all geographies, business, leisure,” he added.
For the third quarter, Delta reported net income of $756 million, or $1.15 per share, representing a 47% decline from the $1.42 billion, or $2.17 per share, recorded a year prior. On an adjusted basis, earnings came in at $1.72 per share against expectations of $1.75, while adjusted revenue reached $17.59 billion, slightly below the $17.67 billion consensus.
However, when excluding benefits derived from its Trainer, Pennsylvania, refinery—which converts crude oil into jet fuel and other products—revenue rose 16% year-over-year. Operating revenue climbed 21% to $20.19 billion. Premium cabin revenue, a key growth driver, increased 18% to $6.82 billion, outpacing the 12% growth seen in main cabin sales, which totaled $6.8 billion.
Bastian attributed part of the strong fourth-quarter revenue forecast, which calls for a 20% increase over last year, to the removal of the refinery benefit that boosted third-quarter figures. The carrier is also navigating broader inflationary pressures; recent data indicated that airfares rose more than 23% from a year earlier in September. Delta stands as the most profitable airline in the United States and was the first major carrier to report Q3 results.
Passing $6 billion in fuel costs to consumers is brutal. Airfares already up 23%? I’m staying home next holiday.
Surprised they missed estimates. Delta usually smashes it. Hope they aren’t cutting routes to save money; that will hurt travelers.
Did anyone else notice the refinery benefit skewing the third quarter numbers? Seems like they’re using that to soften the blow for Q4 guidance.
It’s interesting that premium cabin revenue is growing faster than main cabin. Rich people fly regardless of the economy, clearly.
Finally! Airlines need to stop blaming fuel for their greed. Prices went up, profits are down, but why do I pay more for less?