Delta cuts profit outlook as fuel costs outweigh strong bookings

Delta Air Lines lowered its 2026 profit outlook on October 9 as the Atlanta-based airline reported September-quarter results, with an expected $6 billion increase in annual fuel costs outweighing strong demand. The cut puts higher operating costs at the centre of its earnings outlook even as passengers continue booking at higher fares.

Delta now expects full-year adjusted earnings of $5.10 to $5.60 per share, down from the $6.50 to $7.50 range it forecast in July, according to Al Jazeera and Reuters. The new range’s midpoint is $5.35, below the $5.46 analyst average the report cited from LSEG.

Chief executive Ed Bastian nevertheless expects approximately $4.5 billion in annual pretax profit, according to Delta’s results release. The $6 billion fuel figure represents an expected increase in annual costs, rather than the airline’s total fuel spending. Both figures remain forecasts.

Fuel costs outpace Delta’s revenue growth

Delta’s September-quarter results show the size of the cost increase. Adjusted fuel expense rose 62% to $4.1 billion, while the adjusted price paid per gallon climbed 60% to $3.61. Those increases came in a quarter when the airline reported flat capacity.

Chief financial officer Erik Snell said quarterly fuel costs exceeded Delta’s July guidance by more than $500 million. That comparison shows how much the fuel bill moved beyond the assumptions underlying the airline’s earlier outlook, despite the increase in revenue.

In separate reporting, Skift’s Meghna Maharishi reported that Snell told reporters higher jet-fuel costs drove the guidance change. He cited an average fuel price of $4.50 as of Thursday evening, October 8. That market observation is distinct from Delta’s $3.61 adjusted price for the completed quarter.

Higher fares and premium seats support demand

“Demand remains strong,” Bastian said in Delta’s results release. Premium revenue increased 18% on 6% more seats, providing one source of growth as the company faced its larger fuel bill. Revenue growth in that segment exceeded the increase in available premium seats.

Al Jazeera and Reuters reported that Bastian said Delta had raised prices roughly 20% this year and believed those prices could be sustained even if fuel costs declined. That is management’s assessment of pricing, rather than a guarantee about future fares or a measure of every passenger’s ticket.

The same report said 60% of fourth-quarter flights were already booked. It also cited Bastian’s comments to The Wall Street Journal that holiday bookings remained strong. Those statements describe bookings at the time of the report; they are not completed fourth-quarter results.

The strength of those bookings sits alongside evidence of pressure on household travel budgets. Al Jazeera and Reuters cited Deloitte research from May in which 51% of Americans earning less than $100,000 annually said travel would be among the first expenses they would cut.

That survey measured stated spending intentions. It does not establish that those respondents cancelled trips, or that Delta’s customers behaved in the same way. It provides context for the airline’s strong demand claims without measuring its subsequent sales.

What Delta assumes for the fourth quarter

Delta’s fourth-quarter guidance assumes fuel at approximately $4.25 per gallon, including a 40-cent refinery benefit, using the October 2 forward curve. This is a forecast assumption, separate from both the completed quarter’s fuel price and the October 8 price cited by Snell.

Delta owns a Pennsylvania refinery that it acquired in 2012, according to Al Jazeera and Reuters. The refinery’s projected contribution is included in the fourth-quarter fuel assumption, but the company still expects a substantial annual increase in fuel costs.

For the fourth quarter, Delta forecasts adjusted earnings of $1.15 to $1.65 per share and revenue growth of roughly 20%. Its full-year plans also include approximately $2.5 billion in free cash flow and more than $2 billion in debt repayment.

Delta’s September-quarter financial results set out those forecasts and the fuel assumptions behind them.