Delta cuts 2026 profit outlook as fuel costs outpace higher fares

Delta Air Lines cut its 2026 adjusted earnings outlook on Friday morning to $5.10 to $5.60 a share, from $6.50 to $7.50 in July. The midpoint fell 24%, from $7 to $5.35.

Erik Snell, the chief financial officer, told reporters the reduction came from higher crude oil and refined jet fuel prices since the summer.

"All of it's fuel," he said.

Around 7:40 a.m. Eastern time, before the U.S. market opened, Delta shares were quoted at $79.80, down 2.8% from Thursday's close. The new midpoint sat just under the $5.46 average of analyst estimates compiled by LSEG, already below the range Delta set in July. On our read, that average had already covered most of the drop from July's $7 midpoint.

The higher fuel costs Snell described were apparent in the September quarter. Adjusted fuel expenses rose 62%, to $4.14 billion, and Delta paid $3.61 a gallon on average, compared to $2.25 a year earlier.

Delta's fuel costs ran more than $500 million above their early July planning assumption, which was about $3.15 a gallon.

For the fourth quarter, Delta is projecting a fuel price of about $4.25 a gallon, based on prices for later delivery as of Friday, October 2. That is well above the $3.61 per gallon fuel cost for the quarter just ended.

If fuel stays near that price, Delta expects earnings of $1.15 to $1.65 a share and a margin of 7% to 9%.

Adjusted earnings were $1.72 a share, in line with a year earlier but short of both Delta's own $2.00 to $2.50 projection and the $1.75 analyst estimate compiled by LSEG. It was the first time in two years Delta had missed that estimate. The margin, operating profit as a share of adjusted revenue, was 9.4%, under the 11% to 13% forecast from July.

Non-fuel unit costs rose 7.3%, driven by hgher crew costs, and summer storms accounted for nearly one percentage point of the increase.

Delta said September-quarter revenue set a record on broad demand and higher fares. Adjusted revenue was $17.6 billion, up about 16% from a year earlier, even though the airline offered about the same number of seats. Ed Bastian, the chief executive, said fares kept rising as Delta passed along much of the higher fuel cost.

"The consumer response continues to be quite strong," Bastian said. "We're seeing it across all channels, all cabins of service, all geographies, business, leisure."

With almost 60% of the fourth quarter already booked, Snell said revenue should grow about 20% from a year earlier.

Bastian said Delta should earn roughly $4.5 billion before tax this year while absorbing a $6 billion increase in fuel costs from 2025. Delta also cut its free-cash-flow outlook — operating cash minus capital spending — to about $2.5 billion from $3 billion to $4 billion in July.

The $4.25 assumption sits in a market still being set by the war the United States and Israel are fighting with Iran, now in its eighth month. The fighting has disrupted supplies of jet fuel and other refined products, and attacks on ships have increased this month in the Strait of Hormuz, a lane that carried about 20% of the world's oil and fuel before the war. Hurricane Isaias has shut in about 1.3 million barrels a day of oil production in the Gulf of Mexico, with landfall expected Friday night or early Saturday.

Oil rose about 4% on Thursday, the day President Donald Trump said the United States would not attack Iran before the midterm elections on Tuesday, November 3. By Friday morning, Brent crude, the global benchmark, was at $102.72 a barrel, down 1.5% from Thursday. That dip does not change the October 2 prices in Delta's forecast.

"Ultimately, fuel will come down," Snell said. "When that is, we're not exactly sure."

Southwest said in September that higher fuel prices had led it to cut roughly in half the growth planned for its 2026 schedule, and that it might cut more if fuel stayed high. Delta's new outlook did not include a cut like that.

Whether travelers keep absorbing further fare increases, if fuel stays as high as Delta has planned for the fourth quarter, is what the next airline results will test.