Delta cuts profit forecast

Delta Air Lines reduced its annual profit forecast by nearly 25 percent on Friday, citing rising fuel prices as a major factor. The company now expects adjusted earnings per share to range between $5.10 and $5.60 for 2026, down from a previous range of $6.50 to $7.50.

Fuel costs surge

Delta’s annual fuel bill is expected to increase by about $6 billion compared to last year. In the third quarter, fuel expenses rose 62 percent year-on-year to $4.1 billion, exceeding expectations by over $500 million. The increase is attributed to higher crude oil and jet fuel prices since the summer.

Delta’s refinery provides some relief

Delta has a unique advantage among major U.S. carriers: it owns a refinery near Philadelphia. This refinery is expected to generate $700 million in profits this year. “We have a refinery that allows us to partially offset fuel prices, which no other company does,” said Erik Snell, Delta’s chief financial officer.

Strong demand but tighter margins

Despite strong travel demand, Delta’s adjusted operating margin fell to 9.4 percent, down from 11.1 percent previously. For the quarter, adjusted net earnings per share were $1.72, compared to a consensus of $1.76. The company anticipates adjusted pre-tax profits of $4.5 billion.

Fuel prices continue to rise

Fuel costs are expected to reach $4.25 per gallon in the fourth quarter, compared to $3.61 in the third. Delta’s demand remains strong, with nearly 60 percent of fourth-quarter reservations already booked. The airline expects revenue growth of approximately 20 percent year-on-year.

Industry faces challenges

Delta is the first of the major U.S. airlines to report its quarterly results. United Airlines, American Airlines, and Southwest Airlines will follow in the coming days. U.S. airlines spent $42.9 billion on fuel for regular flights during the first eight months of 2026, nearly $13.2 billion more than a year earlier.

Airlines adjust strategies

Analysts are questioning the industry’s ability to pass on further fare increases without dampening demand. In response, several carriers have reduced their capacity growth targets. American Airlines added about $1 billion to its fourth-quarter costs due to fuel prices. United Airlines canceled some planned flights for December and may adjust further in 2027.

Passenger acceptance remains uncertain

Overall demand remains strong, allowing airlines to maintain high prices for now. However, the challenge is clear: how much will passengers accept new fare increases? Delta has assured that its premium strategy and partnerships, including with American Express, continue to support its results. The industry as a whole remains exposed to the volatility of energy prices in a tense geopolitical context.