Delta Air Lines Slashes 2026 Profit Outlook After Fuel Costs Surge 62% in Q3

Delta Air Lines missed Wall Street earnings estimates for the first time in two years and sharply cut its full-year profit forecast after jet fuel costs surged 62% from a year ago, driven by the US-Israeli war with Iran. For the third quarter, Delta reported adjusted revenue of $17.58 billion, below the $17.76 billion analyst estimate, and adjusted EPS of $1.72 against an estimate of $1.82. The quarter's fuel bill reached $4.1 billion, about $500 million above the guidance Delta had issued in July.

Delta cut its full-year adjusted EPS guidance to $5.10-$5.60 from a prior range of $6.50-$7.50, and trimmed its free cash flow outlook to roughly $2.5 billion from the previous $3 billion-$4 billion range. The company said it now expects to absorb a $6 billion increase in total annual fuel costs while still generating a full-year pre-tax profit of approximately $4.5 billion. Shares fell following the report, with DAL down about 1.6% in early trading.

For the fourth quarter, Delta guided for revenue growth of approximately 20% year over year, above the 16% gain in Q3 when adjusted for the company's Trainer, Pennsylvania refinery benefit. The Q4 outlook assumes an all-in fuel price of about $4.25 per gallon. Despite the profit revisions, CEO Ed Bastian said demand remains strong, airfares are rising further, and Delta remains confident in its long-term framework targeting mid-teens margins and a mid-teens return on invested capital.