Rising fuel costs slashed Delta’s profit outlook despite strong demand
Summary
Delta Air Lines lowered its profit forecast for the year because rising fuel costs have increased expenses, even though demand for air travel remains strong. The company expects to spend $6 billion more on fuel this year due to global tension affecting fuel prices and has raised ticket prices by about 20%.Key Facts
- Delta expects annual fuel costs to increase by $6 billion in 2024.
- Higher fuel prices are linked to tensions between the U.S. and Iran.
- U.S. airlines spent $43 billion on fuel in the first eight months of 2024, up $13.2 billion from last year.
- Delta lowered its earnings forecast to $5.10-$5.60 per share from $6.50-$7.50 earlier this year.
- Despite higher prices, 60% of Delta’s flights for the last quarter are already booked.
- Delta raised ticket prices by about 20% and expects those prices to hold even if fuel prices fall.
- The airline added new international routes that will start in 2025, including Seattle to Tokyo and Boston to Venice.
- Premium travel revenue at Delta increased by 18%, while lower-income travelers are cutting back on spending due to rising prices.
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