Delta Air Lines (DAL) shares are down about 4% this morning (trading at about $79) after the airline cut its full-year profit forecast on a jump in fuel costs.
Delta now expects adjusted EPS of $5.10 to $5.60, down from $6.50 to $7.50 in July. The cause is one line item. Delta expects its fuel bill to rise by about $6 billion this year, and CFO Erik Snell put it plainly: “All of it’s fuel.”
What Delta Reported
Third-quarter adjusted EPS came in at $1.72, slightly below the $1.75 analysts expected, per CNBC. Adjusted fuel costs rose 62% to $4.14 billion, with the adjusted average price per gallon up 60% to $3.61.
Demand held up. Adjusted revenue rose about 16%, and Delta guided fourth-quarter revenue up about 20%. Free cash flow guidance fell to about $2.5 billion from up to $4 billion.
The $6 Billion Problem
Delta now expects about $4.5 billion of adjusted pre-tax profit for the year. The fuel increase alone is bigger than that.
Delta’s EBIT margin had settled near 9% for three straight years, reaching 9.4% in 2024 and 8.9% in 2025.
It doesn’t get easier from here. Delta’s fourth-quarter guidance assumes fuel at about $4.25 a gallon, above the $3.61 it paid in the third quarter. At about $79, the stock trades near 15 times the new $5.35 EPS midpoint, versus about 11 times the old $7.00 midpoint.
United and American Buy the Same Fuel
Delta’s problem isn’t company-specific. United Airlines (UAL) and American Airlines (AAL) face the same rise in market fuel prices, though their actual fuel costs differ. American Airlines already warned in July of deeper potential losses as its fuel bill climbed. Delta has a partial offset from its refinery, alongside strength in premium ticket revenue and loyalty travel-award revenue, each up 18%.
Where the Street Stands on Delta Stock
Going into the report, the mean analyst target was $101, about 23% above Thursday’s $82 close. Ratings were heavily bullish, with 19 buys, 5 outperforms and 1 underperform.
Those targets were set before a 24% cut to the EPS midpoint. With fourth-quarter fuel guided even higher, the number to watch over the coming days is how far that $101 average comes down.
Watch the Street’s targets reset in real time: Delta’s price target history, ratings and margin trend are all on TIKR for free. Learn more here.
So what is Delta stock actually worth?
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