- Delta Air Lines missed Wall Street earnings estimates for the first time in two years and cut its 2026 profit forecast.
- Delta CEO Ed Bastian said demand remains strong and that fares appear to be rising further as fuel prices stay high.
- Jet fuel prices have surged this year since the Iran war started in February, driving up airlines' second-largest cost after labor.
In this article
Follow your favorite stocksCREATE FREE ACCOUNTwatch nowVIDEO6:0706:07Delta Air Lines CEO Ed Bastian on Q3 results: We maintained our overall level of profitabilitySquawk BoxDelta Air Lines slashed its 2026 profit outlook as high fuel prices persist, but CEO Ed Bastian said higher fares aren't turning off travelers.
Delta on Friday forecast full-year earnings per share of between $5.10 and $5.60 on an adjusted basis, compared with its outlook in July, when fuel prices were lower, of $6.50 to $7.50 a share. The company's fourth-quarter guidance was below analyst estimates, too.
Delta cut its free cash flow outlook for the year to $2.5 billion, from as much as $4 billion it expected in July.
Still, Bastian said in an interview that fares have continued to tick up as the airline passes along much of a $6 billion increase in fuel costs this year, and that travelers keep booking. Jet fuel prices in the U.S. Gulf of Mexico region have almost doubled to $4.34 on Thursday from $2.19 a year earlier, according to FactSet.
"The consumer response continues to be quite strong. We're seeing it across all channels, all cabins of service, all geographies, business, leisure," he said.
Delta forecast a 20% increase in revenue for the fourth quarter over the same period last year, more than the 16% rise in the third quarter, when adjusting for the airline's benefit from its refinery in Trainer, Pennsylvania, where it refines crude oil into jet fuel and other products, giving it an advantage over other carriers.
"Obviously the fuel pricing, the volatility of fuel prices have something to do with that," Bastian said.
Delta is the country's most profitable airline and the first to report results from the third quarter, which encompasses the busy summer season.
Costs continued to weigh on the bottom line. The fuel price surge since the Iran war began in February has put a damper on airline profits even as carriers flex pricing power. The latest inflation read in September showed airfare up more than 23% from a year earlier.
Here's what the company reported for the third quarter compared with what Wall Street was expecting, based on consensus estimates from LSEG:
- Earnings per share: $1.72 adjusted vs. $1.75 expected
- Adjusted revenue: $17.59 billion adjusted vs. $17.67 billion expected
It was the first time in two years that Delta missed estimates.
Delta reported net income of $756 million, or $1.15 a share, down 47% from $1.42 billion, or $2.17 per share, a year earlier. Adjusting for one-time items, Delta posted earnings of $1.76 per share.
Adjusting for sales from its refinery, maintenance business and profit-sharing, revenue rose 16% from the previous year to $17.59 billion. Operating revenue jumped 21% in the third quarter to $20.19 billion.
Delta's premium revenue, which has become a larger portion of its total sales, grew 18% in the third quarter to $6.82 billion, while main cabin sales rose only 12% to $6.8 billion.
- Why airfare could rise even more, but airline profits won’t
- Budget airline king Bill Franke warms to premium upgrades
- Companies spurn airlines’ cheapest business class tickets
- United’s next decision: What to do with all those Boeing 737 Max 10 seats it ordered years ago
- Record heat, crowds drive offseason boom in international travel
Musk dispute
Delta, which announced free Wi-Fi across its fleet almost four years ago, recently said it would add Amazon Leo satellite internet to its airplanes as carriers race to improve service on board to living-room-quality speeds.
SpaceX CEO Elon Musk criticized Bastian on X last week, saying the Delta CEO would "lose his job over this" after the View from the Wing travel blog said Bastian told staff at an internal event "We do not want to be with Elon Musk. Trust me."
SpaceX's Starlink Wi-Fi has become the main supplier of satellite Wi-Fi, with airline partnerships that include United Airlines, American Airlines, Southwest Airlines and Alaska Airlines, as well as others around the world.
Delta's Bastian brushed off the idea of a personal spat with Musk on Friday and told CNBC's Phil LeBeau in an interview that "everyone's entitled to their opinion."
"There's no tit-for-tat as far as I'm concerned," Bastian said. He said Delta had talks with SpaceX six years ago, but they "weren't ready to scale."
watch nowVIDEO2:1702:17Delta Air Lines CEO Ed Bastian on Elon Musk: There's no tit for tat as far as I'm concernedSquawk BoxChoose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.
