Delta Air Lines cuts 2026 profit outlook after Q3 earnings miss

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Delta cuts 2026 profit outlook

Highlights

Delta Air Lines lowers its 2023 adjusted EPS forecast to $5.10–$5.60 from $6.50–$7.50 and cuts free cash flow guidance to $2.5 billion from $4 billion.
Q3 adjusted EPS of $1.72 misses $1.75 consensus, with net income down 47% to $756 million and adjusted revenue at $17.59 billion below $17.67 billion expectations.
Despite elevated fuel costs and profit drop, Delta forecasts Q4 revenue growth of 20% year-over-year and reports 18% premium travel revenue growth in Q3.

Revised guidance after third-quarter shortfall

As reported by CNBC, Delta Air Lines misses Wall Street earnings estimates for the first time in two years and cuts its full-year outlook as elevated fuel prices continue to weigh on profitability.

The airline says on Friday that it now expects full-year adjusted earnings per share of $5.10 to $5.60, down from its July outlook of $6.50 to $7.50, when fuel prices were lower. Its fourth-quarter guidance also comes in below analyst estimates, while Delta reduces its free cash flow forecast for the year to $2.5 billion from as much as $4 billion expected in July.

For the third quarter, Delta reports adjusted earnings per share of $1.72 against Wall Street expectations of $1.75, based on LSEG consensus estimates. Adjusted revenue totals $17.59 billion, compared with expectations of $17.67 billion.

Net income falls 47% to $756 million, or $1.15 a share, from $1.42 billion, or $2.17 a share, a year earlier. Adjusted for one-time items, Delta posts earnings of $1.76 per share.

Demand and pricing remain supportive

Despite the weaker outlook, Chief Executive Ed Bastian says higher fares are not discouraging travelers. He says customer demand remains strong across business and leisure travel, across cabins and geographies, as Delta passes through much of a $6 billion increase in fuel costs this year.

Delta forecasts fourth-quarter revenue growth of 20% from a year earlier, faster than the 16% increase in the third quarter after adjusting for the benefit from its Trainer, Pennsylvania refinery. The facility refines crude oil into jet fuel and other products, giving Delta a cost advantage over other carriers.

Operating revenue rises 21% in the third quarter to $20.19 billion. Excluding sales from the refinery, maintenance business and profit-sharing, revenue increases 16% from a year earlier to $17.59 billion.

The results also show continued strength in higher-end travel spending. Premium revenue grows 18% to $6.82 billion in the third quarter, while main cabin sales rise 12% to $6.8 billion.

Delta, the country's most profitable airline and the first major carrier to report third-quarter results, is reporting against a backdrop of higher industry costs. The fuel price surge since the Iran war began in February is dampening airline profits even as carriers retain pricing power, and the latest September inflation data shows airfare up more than 23% from a year earlier.

In our earlier article on how the Iran war is reshaping investor views on major oil companies, we explained that prolonged disruption around Iran and the Strait of Hormuz has increased the value of refining, trading, and regional gas exposure. We noted that tighter supplies of products like jet fuel can widen refining spreads, benefiting integrated firms with strong downstream networks and global portfolios even as valuation gaps between European and U.S. majors persist.

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