Delta Air Lines has lowered its 2026 profit expectations as soaring jet fuel costs weigh on earnings, highlighting the challenge airlines face in protecting margins even when customers continue booking flights. The carrier reported third-quarter results slightly below Wall Street expectations, marking its first earnings miss in two years, while management maintained that strong demand and rising fares are helping absorb a significant portion of the increase in operating expenses.

Fuel Costs Force a Sharp Forecast Reduction

Delta now expects full-year adjusted earnings per share of $5.10 to $5.60, compared with its July forecast of $6.50 to $7.50, when fuel prices were lower. The airline also reduced its free cash flow outlook to $2.5 billion from as much as $4 billion previously expected.

The change reflects the scale of the fuel-cost shock confronting the industry. Jet fuel prices in the U.S. Gulf region reached $4.34 on Thursday, compared with $2.19 a year earlier, according to FactSet. Delta said it is passing along much of an approximately $6 billion increase in fuel expenses this year through higher fares.

Travel Demand Remains Resilient

Despite the higher ticket prices, CEO Ed Bastian said customer demand continues to hold up across business and leisure travel, different cabin classes and geographic markets. The company expects fourth-quarter revenue to increase 20% year over year, exceeding the 16% growth recorded in the third quarter when adjusted for the benefit of its refinery operations.

The ability to raise fares without immediately weakening bookings is an important advantage for Delta. However, the durability of that pricing power remains central to its financial outlook, particularly if elevated fuel costs persist and household travel budgets come under greater pressure.

Third-Quarter Results Miss Expectations

Delta reported adjusted earnings of $1.72 per share, below the $1.75 expected by analysts. Adjusted revenue reached $17.59 billion, also missing the $17.67 billion consensus estimate.

Net income declined 47% to $756 million, or $1.15 per share, from $1.42 billion, or $2.17 per share, a year earlier. After adjustments for refinery sales, maintenance operations and profit-sharing, revenue increased 16% to $17.59 billion. Total operating revenue rose 21% to $20.19 billion.

Premium travel continued to outperform the main cabin. Premium revenue increased 18% to $6.82 billion, while main-cabin sales rose 12% to $6.8 billion. The difference highlights the importance of higher-priced travel segments to Delta’s revenue mix as the airline seeks to protect profitability.

Refinery Operations Offer a Partial Advantage

Delta operates an oil refinery in Trainer, Pennsylvania, where crude oil is processed into jet fuel and other products. That operation provides a degree of protection against fuel-market volatility compared with airlines that depend more heavily on external suppliers.

Nevertheless, the refinery does not eliminate the impact of higher fuel prices. Delta’s reduced earnings and cash flow forecasts demonstrate that even a carrier with this additional source of supply remains exposed to a major increase in energy costs.

Satellite Connectivity Adds a Separate Strategic Challenge

Delta is also expanding its onboard connectivity strategy, announcing plans to introduce Amazon Leo satellite internet as airlines compete to improve the passenger experience. The move follows criticism from SpaceX CEO Elon Musk after reports of comments by Bastian about the company’s Starlink service.

Bastian dismissed the suggestion of a personal dispute, saying there was no “tit for tat” from his perspective. He added that Delta had discussed a potential relationship with SpaceX six years ago but believed the service was not ready to scale at that time. The connectivity decision represents a separate competitive issue as airlines seek to differentiate their products and retain customers.

What Investors Should Watch Next

Delta’s outlook now depends heavily on whether strong demand and higher fares can continue offsetting fuel expenses. The forecast reduction shows that revenue growth alone may not be enough to preserve earnings when a major operating cost rises rapidly.

Investors will be watching ticket pricing, premium-cabin demand, fuel prices and free cash flow as the year progresses. If travel demand remains resilient, Delta may retain meaningful pricing power. However, sustained fuel inflation could continue limiting margins, leaving the airline’s profitability dependent on its ability to balance higher fares with customer demand.