Delta Air Lines has slashed its profit outlook despite record third-quarter revenues, citing a surge in jet fuel prices tied to the Iran conflict. The US carrier's net income declined nearly 50% as fuel expenses rose 69% to $4.71 per gallon. Revenues grew 16% to $17.6 billion as travelers continued to spend.
Delta has reduced its full-year earnings-per-share guidance to $5.10-$5.60 from $6.50-$7.50. CFO Erik Snell attributed the downgrade entirely to higher fuel costs than the market expected in July. Delta forecasts an average jet fuel price of $4.25 per gallon for the fourth quarter, up from about $2.50 before the US and Israel's military actions in the region.
Unlike European peers, US carriers do not hedge fuel, leaving them exposed. Delta mitigated costs by around $700 million through its owned refinery. The airline has also cut losses by reducing capacity and raising fares.
Snell noted equaling last year's earnings with a 60% higher fuel bill is "truly incredible.".
Source: Financial Times Companies · Summarized by HeadlinesBriefing