Delta Air Lines lowered its full-year earnings outlook on Friday, citing a significant surge in fuel expenses. The carrier now projects adjusted earnings per share between $5.10 and $5.60 for the full year, down substantially from its prior guidance of $6.50 to $7.50 issued in July when fuel prices were lower. Free cash flow expectations were also trimmed to $2.5 billion from a previous target of as much as $4 billion.
Jet fuel prices have nearly doubled during the year, rising to $4.34 per gallon in the U.S. Gulf of Mexico region on Thursday from $2.19 a year earlier, according to FactSet data. The airline estimated that fuel costs would increase by approximately $6 billion over the year. Despite these headwinds, CEO Ed Bastian indicated that demand for air travel remained robust across customer segments and booking channels. He noted that fares have continued to increase as the airline passes along a portion of its higher fuel costs to passengers.
For the third quarter, Delta reported net income of $756 million, or $1.15 per share, representing a 47% decline compared with $1.42 billion, or $2.17 per share, in the prior-year period. Adjusted earnings per share reached $1.76 for the quarter. Revenue grew 21% to $20.19 billion on an operating basis, though adjusted revenue rose 16% to $17.59 billion when excluding refinery, maintenance, and profit-sharing items. Premium revenue climbed 18% to $6.82 billion, while main cabin sales increased 12% to $6.8 billion.
Looking ahead, Delta forecast fourth-quarter revenue growth of 20% compared with the prior-year period, exceeding the 16% increase recorded in the third quarter. The company attributed some of this growth advantage to operational benefits from its refinery in Trainer, Pennsylvania, which processes crude oil into jet fuel and other products, providing a competitive edge over other carriers. The third quarter marked the first instance in two years in which Delta missed Wall Street consensus estimates.
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