Rising fuel costs slashed Delta’s profit outlook despite strong demand

Delta Air Lines cut its profit forecast despite heightened demand as fuel costs surge throughout the air travel sector.

Key points

• Overall, US airlines spent almost $43bn on fuel in the first eight months of the year, a $13.2bn rise from the same period a year earlier.
• United Airlines is the next major carrier projected to report earnings, with results slated for after the market close on October 20.
• The midpoint of the new range is below analysts' average estimate of $5.46, according to LSEG data.
• US consumer sentiment is slumping, according to the University of Michigan's Surveys of Consumers.
• CEO Ed Bastian remarked the airline had raised costs by roughly 20 percent this year and noted those costs could be sustained even if fuel rates decline.

As ongoing tensions between the United States and Iran have sent fuel rates surging throughout the global aviation sector, the Atlanta-based air carrier remarked in its third-quarter earnings report issued on Friday that it expects its annual fuel costs to jump by $6bn.

On Wall Street, Delta cut its earnings outlook for the year to adjusted earnings per share of $5.10 to $5.60, down from its July forecast of $6.50 to $7.50. The midpoint of the new range is below analysts' average estimate of $5.46, according to LSEG data.

Delta's stock tumbled in midday trading as the trading week came to a close. It was down 1.1 percent from Friday's opening cost. While the stock has fallen 4.4 percent over the past five days, it has performed well in 2026, gaining almost 18 percent since the beginning of the year.

Delta Air Lines is the first of the major US airlines to report earnings and is generally more protected from cost fluctuations than its competitors as it owns a refinery in Pennsylvania. It it acquired in 2012.

Despite higher rates, demand remains elevated, with 60 percent of flights in the fourth quarter already booked. As well as Austin-Paris, France, all beginning next year, delta additionally unveiled a number of new international routes, including Seattle-Tokyo, Japan and Boston-Venice, Italy.

Bastian informed the Wall Street Journal that holiday bookings additionally remain solid and that premium travel is growing, with premium seat revenue jumping 18 percent for the quarter compared with the same period last year.

Broadly speaking, premium flights can be a boon for major airlines, and rates in the segment are rising. Average ticket rates for premium seats throughout major airlines were up 11 percent compared with the same period last year, according to the Airline Reporting Corporation's monthly report. It tracks airline ticket transactions.

But lower-income consumers are pulling back. US consumer sentiment is slumping, according to the University of Michigan's Surveys of Consumers. It published its Consumer Sentiment Index on Friday.

"Overall, sentiment for lower-income consumers and those with smaller stock portfolios dropped steeply this month, groups that have fewer resources to weather increases in prices, " Joanne Hsu, director of the Surveys of Consumers, remarked in the release.

After reports that lower-income travellers would pull back against the backdrop of rising rates, delta's report comes as the US summer travel season draws to a close. In May, 51 percent of Americans earning less than $100, 000 annually remarked travel would be one of the first expenses they would cut, according to a report from consulting firm Deloitte.

United Airlines is the next major carrier projected to report earnings, with results slated for after the market close on October 20. Like Delta, United's stock was down on Wall Street, falling 0.8 percent from Friday's opening cost.

Taken together, the developments around rising fuel costs slashed Delta's profit outlook despite strong demand point to a situation that is still moving, and the coming days should bring more clarity.