Delta Air Lines Cuts Adjusted Earnings Forecast as Fuel Costs Rise

Delta Air Lines lowered its full-year adjusted earnings forecast as higher jet fuel costs pressured margins, sending its shares down as much as 3.5% in early U.S. trading.

The airline now expects adjusted earnings of $5.10 to $5.60 a share for the year, down from its July forecast of $6.50 to $7.50.

Delta reported adjusted third-quarter earnings of $1.72 a share, below the consensus estimate of $1.82. Adjusted revenue rose 16% to $17.6 billion.

“I wouldn’t call that a surprise to anyone, it’s all because of higher fuel prices,” CEO Ed Bastian said. “If this continues to go higher for longer, which I think it will, as the premium airline in the industry we have the best ability to be able to price for that.”

Delta operates the Trainer Refinery in Pennsylvania through subsidiary Monroe Energy. The refinery processes 185,000 to 190,000 barrels of crude oil per day, giving Delta an in-house refining operation as fuel costs rise.

Higher fuel costs remain a challenge across the airline industry. The broader airline index fell about 1.5% in early trading.

United Airlines, American Airlines and Southwest Airlines are scheduled to report later this month. Their results will provide additional updates on how higher fuel prices are affecting airline earnings.

The revised outlook follows earlier concerns about Delta’s fuel expenses and earnings outlook ahead of its third-quarter release, detailed in earlier coverage of Delta’s quarterly outlook.