Delta now forecasts adjusted full-year earnings of between $5.10 and $5.60 per share, down from the $6.50 to $7.50 range it issued in July, when fuel prices were lower. Its fourth-quarter guidance also fell short of analyst estimates, and it cut its free cash flow outlook for the year to $2.5 billion, from as much as $4 billion expected in July.
For the third quarter, which covers the US summer travel season, Delta reported adjusted earnings of $1.72 per share, below the $1.75 analysts expected, on adjusted revenue of $17.59 billion, against the $17.67 billion expected. Net income fell 47% to $756 million, or $1.15 a share, from $1.42 billion, or $2.17 a share, a year earlier. Operating revenue rose 21% to $20.19 billion.
Bastian said fares have continued to tick up as the airline passes along much of a roughly $6 billion increase in fuel costs this year, and that bookings remain strong. "The consumer response continues to be quite strong. We're seeing it across all channels, all cabins of service, all geographies, business, leisure," he said.
The fuel price surge since the Iran war began in February has put a damper on airline profits across the sector, even as carriers exercise pricing power. September inflation data showed airfare up more than 23% from a year earlier.
Delta, the most profitable US airline, is the first major carrier to report third-quarter results, making it an early signal for the industry. It also benefits from owning a refinery in Trainer, Pennsylvania, where it converts crude oil into jet fuel and other products, an advantage over rivals. Adjusting for that benefit, third-quarter revenue rose 16% year on year, and the company forecast a 20% increase for the fourth quarter.
"Obviously the fuel pricing, the volatility of fuel prices have something to do with that," Bastian said.
Premium travel continued to lead growth. Premium revenue grew 18% in the third quarter to $6.82 billion, while main cabin sales rose 12% to $6.8 billion.