Delta Cuts Profit Forecast as Fuel Costs Soar

Delta Air Lines cut its annual profit forecast by nearly a quarter on Friday, after soaring fuel costs overwhelmed strong travel demand and higher ticket prices. The downgrade made Delta the first major global carrier to lower its full-year outlook this year, and its shares fell about 2.5 percent in early trading.

The Atlanta-based carrier now expects adjusted earnings of $5.10 to $5.60 a share for the year, down from the $6.50 to $7.50 range it forecast in July. Fuel costs are expected to add six billion dollars to the airline's fuel bill for the year, a figure Delta raised by $2 billion in its revised profit forecast. The new midpoint of $5.35 a share sits below analysts' average estimate of $5.46, according to data compiled by LSEG.

Delta also missed quarterly expectations for the first time since 2024. Adjusted third-quarter earnings came in at $1.72 a share, short of the $1.76 analysts had expected on average, according to the same LSEG data. The carrier's adjusted operating margin narrowed to 9.4 percent from 11.1 percent a year earlier.

Fuel bill surges as Iran war lifts prices

Fuel expenses for the quarter jumped 62 percent from a year earlier to $4.1 billion, overshooting the company's July forecast by more than half a billion dollars. Chief financial officer Erik Snell told reporters the entire profit-forecast cut came down to fuel, pointing to higher crude oil and refined jet fuel prices since the summer.

The airline said the war in Iran has pushed jet fuel prices sharply higher worldwide, and with no end to the conflict in sight, carriers face what analysts describe as their worst crisis since the pandemic. Delta is the first major global carrier to report third-quarter results, and its rivals will face the same arithmetic when they publish in the coming weeks.

The squeeze is industry-wide. United States airlines spent $42.9 billion on fuel for scheduled flights in the first eight months of 2026, nearly $13.2 billion more than a year earlier, despite using slightly less fuel, according to the Bureau of Transportation Statistics. United Airlines, American Airlines and Southwest Airlines report later this month, and their own profit forecasts will show whether Delta's pain is shared across the sector.

Oil is driving the market mood. "Brent has retreated slightly as comments from Washington suggesting progress in US-Iran negotiations helped ease immediate supply concerns," Daniela Hathorn, senior market analyst at Capital.com, said on Friday. "However, continued attacks on shipping around the Strait of Hormuz mean the geopolitical premium is unlikely to disappear quickly."

Fare hikes test travelers' limits

Airlines have already raised fares substantially this year, and the profit forecast cut sharpens the question of whether passengers will absorb further increases if fuel stays expensive. Analysts warn that another round of hikes could test travelers' willingness to keep spending. That risk lands hardest on price-sensitive flyers, including students and young travelers booking the cheapest seats.

Delta says demand itself is holding. The problem is arithmetic: planes are full, fares are higher than a year ago, and the fuel bill is climbing faster than revenue. The carrier now forecasts adjusted pre-tax profit of $4.5 billion for the year.

The wider backdrop adds pressure. Hathorn said higher crude threatens to keep inflation elevated, complicating the Federal Reserve's policy outlook and potentially putting renewed pressure on Treasury yields. Markets closed mixed on Thursday as oil climbed and technology stocks fell, and futures pointed to a shaky start on Friday. The University of Michigan's Surveys of Consumers, a widely watched gauge of household sentiment, was due Friday morning. Average hourly earnings are up a modest 3.0 percent from a year ago, according to labor-market data published this month, a sign household budgets are not stretching much further.

The shares had fallen nearly 4 percent in premarket trading before trimming some of those losses after the open. The broader economy still shows momentum: the Atlanta Federal Reserve's tracker points to annualized third-quarter growth near 3.7 percent, which helps explain how airlines have been able to push fares higher without killing demand.

Delta is the first of the big carriers to report, and how far its rivals follow Delta's lowered profit forecast will become clear in the coming weeks. For travelers, the near-term signal is that cheaper tickets are unlikely while fuel prices hold.

Read the full Reuters report on Delta's profit forecast cut. A second Reuters version with industry fuel-spending data cites the Bureau of Transportation Statistics.

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