Delta Air Lines Cuts Profit Forecast as Iran War Sends Jet Fuel Costs Soaring

Delta Air Lines cut its 2026 earnings outlook by nearly a quarter. Strong demand and pricier tickets couldn’t keep pace with a fuel bill now expected to climb $6 billion from last year.

Delta Air Lines cut its 2026 earnings forecast by nearly a quarter on Friday, saying fuel costs, now expected to climb $6 billion from 2025, outweighed strong demand and higher fares.

The Atlanta-based carrier now expects full-year adjusted earnings of $5.10 to $5.60 per share, according to its third-quarter financial results. In its July earnings release, Delta had kept that range at $6.50 to $7.50. The midpoint of the new range is about 24% below the old one.

Reuters reported that this is the first time Delta has cut its 2026 profit forecast. Delta also raised its expected increase in full-year fuel costs by $2 billion from its July estimate.

“All of it’s fuel,” Chief Financial Officer Erik Snell told reporters when asked about the lower outlook, according to Reuters.

Why Delta Air Lines’ profit forecast fell

Reuters reported that crude oil and refined jet fuel prices have risen since the summer, and it has linked the jump in jet fuel prices to the Iran war. Higher fares and strong bookings did not fully cover the extra cost, Reuters said, leaving the industry facing the question of whether passengers will accept more price increases.

Delta’s adjusted fuel expense reached $4.1 billion in the third quarter. That was up 62% from a year earlier and more than $500 million above what the airline expected in July. The carrier paid an adjusted $3.61 per gallon of fuel during the quarter.

Fuel was not the only cost that rose. Delta said its non-fuel unit costs increased 7.3% from a year earlier in the third quarter.

Demand holds up, margins shrink

Delta’s figures show customers kept flying. Third-quarter adjusted revenue rose 16% to $17.6 billion even though the airline flew the same capacity as a year earlier. Premium revenue climbed 18%.

Margins still narrowed. The adjusted operating margin fell to 9.4% from 11.1% a year earlier.

Adjusted earnings came to $1.72 per share for the quarter. Reuters reported that analysts had expected $1.76, based on LSEG data. For the full year, analysts had been looking for $5.46 per share, which is inside Delta’s new range but above its midpoint.

Under generally accepted accounting principles, Delta earned $1.15 per share in the third quarter on revenue of $20.2 billion. The company reports its adjusted figures as non-GAAP measures and reconciles them to GAAP results in its release.

Analysts question how long fares can carry the load

Liam Dorsey, an analyst at Third Bridge, said the firm’s experts see premium travelers and higher fares propping up airline revenue and outlooks.

“The general sentiment from our experts is that much of the revenue results and outlooks are held up by the premium passenger and higher fares,” Dorsey said, according to Reuters.

“At the moment, those higher prices have not destroyed any demand and it remains to be seen how long that will last.”

Deutsche Bank analysts expect airlines to recover a smaller share of their higher fuel costs through revenue measures in the fourth quarter, Reuters reported. They do not expect full recovery until early 2027.

Fourth-quarter outlook

Delta expects fourth-quarter adjusted earnings of $1.15 to $1.65 per share. It forecasts revenue growth of about 20% from a year earlier. Reuters reported that around 60% of the quarter was already booked.

The airline expects fuel to cost about $4.25 per gallon in the fourth quarter. That figure includes a benefit of about 40 cents per gallon from its refinery and is based on fuel futures prices as of Oct. 2.

For the full year, Delta now expects adjusted pretax profit of about $4.5 billion. It lowered its free cash flow forecast to about $2.5 billion, down from $3 billion to $4 billion in July.

Snell said the airline does not know when fuel prices will ease.

“Ultimately, fuel will come down. When that is, we’re not exactly sure,” he said.

In later reporting by Reuters, CEO Ed Bastian said the industry would likely need to hold back further on capacity growth in 2027. He also said international flying would likely make up more of Delta’s growth.

Delta shares fell 2.5% in early trading Friday and were down 1.7% in the afternoon, Reuters reported.

Refinery offers partial cushion

Delta owns an oil refinery, which gives it some protection from fuel prices that most rivals don’t have. Snell said the protection is only partial.

“We have a refinery that gives us an offset, a partial offset to fuel prices that no one else does,” Snell said.

According to Reuters, Delta bought the Monroe refinery outside Philadelphia in 2012. The plant turns crude oil into jet fuel and other products. Delta’s airline pays market prices for the fuel it gets from the refinery, but the company keeps the refining profit.

The size of that profit depends on refining margins, which can shrink or turn into losses. Those margins track the crack spread, which is the gap between the price of crude oil and the price of the fuels made from it. Snell expects the refinery to earn $700 million in profit in 2026, Reuters reported.

Industry-wide fuel squeeze

The rise in fuel costs reaches well beyond Delta. Scheduled U.S. airlines spent about $42.9 billion on fuel from January through August 2026, according to the Bureau of Transportation Statistics. That is roughly $13.2 billion more than in the same period of 2025, even though they used 0.72% less fuel. The July and August numbers are preliminary.

In August alone, U.S. airlines spent $6.17 billion on fuel, according to a BTS release. That was up 60.2% from a year earlier. They paid $3.72 per gallon.

Passengers are paying more as well. The Bureau of Labor Statistics said airline fares rose 23.4% in the 12 months through August. Reuters, citing the consumer price index, reported that fares rose about 25% on average from April through August.

Ryanair Group CEO Michael O’Leary said high jet fuel costs could last another 12 to 18 months, Reuters reported on Thursday.

United Airlines, American Airlines and Southwest Airlines report their earnings later in October.