Delta Air Lines revised downward its full-year earnings forecast on Friday, citing persistent fuel price pressures that have significantly impacted profitability this year. The carrier now projects adjusted earnings per share between $5.10 and $5.60 for the year, down substantially from its July guidance of $6.50 to $7.50 when fuel costs were lower. The company also reduced its free cash flow outlook to $2.5 billion from a prior expectation of up to $4 billion.
Despite the margin compression, Chief Executive Officer Ed Bastian indicated that passenger demand remains resilient across all service segments and geographies. The airline has implemented successive fare increases to offset a $6 billion rise in fuel expenses this year, and Bastian stated that travelers continue booking travel despite higher prices. Jet fuel prices in the U.S. Gulf of Mexico region have approximately doubled over the past year, reaching $4.34 per unit compared with $2.19 a year earlier, according to pricing data.
Delta reported third-quarter adjusted earnings of $1.72 per share, falling short of analyst expectations and marking the first earnings miss in two years for the nation’s most profitable airline. Net income declined 47% year-over-year to $756 million, while adjusted operating revenue climbed 21% to $20.19 billion. Premium cabin revenue grew 18% to $6.82 billion during the quarter, outpacing main cabin sales growth of 12%.
The company forecast fourth-quarter revenue to rise 20% from the comparable period last year, accelerated by refinery operations that provide a cost advantage relative to competitors. Delta noted that fuel price volatility stemming from geopolitical developments earlier in the year has pressured airline industry margins broadly, even as carriers exercise pricing power. Consumer inflation data released in September showed airfares up more than 23% annually.
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