Delta Flight Status turned lower on Friday morning after Delta Air Lines cut its full-year outlook. The company reported third-quarter adjusted revenue of $17.58 billion and adjusted earnings per share of $1.72, both below estimates.
Ed Bastian said Delta still expects to generate roughly $4.5 billion in pre-tax profit this year while absorbing a $6 billion increase in fuel costs. Delta also lowered its adjusted EPS forecast to $5.10 to $5.60 from $6.50 to $7.50, and cut free cash flow guidance to $2.5 billion from $3 billion to $4 billion.
Delta Air Lines results on Friday
Delta's adjusted revenue came in below the $17.76 billion analysts expected, though it was still up 15.7% from a year ago. Adjusted net income reached $1.134 billion, versus the $1.23 billion estimate, showing the quarter beat neither the top line nor profit measures that investors were watching.
Erik Snell said on a call with reporters that the guidance cut was due to fuel. He added, "All of it's fuel," and said he expects fuel costs to be higher next quarter as well.
Fuel costs and Delta Flight Status
Delta said its quarterly fuel bill reached $4.1 billion, up 62% from a year ago. The company said performance was hit by $500 million in higher fuel costs than the guidance it issued in July, which helps explain why the full-year view moved down so sharply.
Even with that pressure, Delta said its premium business grew 18% in Q3 and loyalty revenue rose 18%. The operating mix is still growing, but the fuel bill is moving faster than the rest of the business can offset.
Delta is planning to grow capacity by 2%, so the company is not pulling back its network plan even as it trims profit and cash expectations. For investors, the practical read is that Delta is still expanding, but the cost shock leaves less room for each added seat to turn into profit.
Ed Bastian outlook
Bastian said, "Looking ahead, our focus remains on profitable growth and delivering against our long-term financial framework, including mid-teens margins and returns, durable free cash flow, and gross leverage of approximately one times." That sets the next point to watch: whether higher fuel costs keep forcing profit targets lower while capacity still rises.
