Delta Air Lines cuts 2026 forecast on fuel surge, but CEO says demand is still strong

Delta Air Lines cut its full-year 2026 earnings outlook on Friday as persistently high fuel prices compressed margins, though CEO Ed Bastian argued that robust demand remains intact across all customer segments. The airline, the most profitable carrier in the country, lowered its adjusted earnings per share forecast to between $5.10 and $5.60, a sharp reduction from the $6.50 to $7.50 range it projected in July when fuel costs were lower. Delta also trimmed its expected free cash flow for the year to $2.5 billion, down from a previous estimate of as much as $4 billion.

The guidance miss comes as jet fuel prices in the U.S. Gulf of Mexico region have nearly doubled to $4.34 per gallon from $2.19 a year earlier, according to FactSet data. Bastian said the airline is passing along much of a $6 billion increase in fuel costs this year through higher fares, yet travelers continue to book. In an interview, Bastian noted that the airline is observing solid booking activity across every channel, cabin class, and geographic region, including both business and leisure travelers.

For the third quarter, Delta reported net income of $756 million, or $1.15 per share, a 47% decline from $1.42 billion, or $2.17 per share, in the same period last year. After adjusting for one-time items, the airline posted earnings of $1.72 per share, missing consensus estimates from LSEG for the first time in two years. Operating revenue jumped 21% to $20.19 billion, while revenue adjusted for refinery sales, maintenance business and profit-sharing rose 16% to $17.59 billion.

Premium revenue, which now constitutes a larger portion of total sales, grew 18% to $6.82 billion, outpacing the 12% rise in main cabin sales to $6.8 billion. Delta forecast a 20% increase in fourth-quarter revenue compared with the same period last year, exceeding the 16% rise seen in the third quarter when adjusting for its advantage from operating a refinery in Trainer, Pennsylvania.

The fuel price surge has weighed on airline profits even as carriers exercise pricing power, with the latest inflation data showing airfares up more than 23% from a year earlier. Beyond financials, Delta is moving to enhance in-flight connectivity by adding Amazon Leo satellite internet to its fleet, which already offers free Wi-Fi. This move comes amid tensions with SpaceX CEO Elon Musk, who criticized Bastian on X last week after reports that Bastian told staff Delta did not want to partner with Musk's company. Bastian dismissed the feud on Friday, stating there is no tit-for-tat and noting that previous talks with SpaceX six years ago failed because the technology was not ready to scale.