The Zhitong Finance App learned that the latest performance report released by American aviation giant Delta Air Lines (DAL.US) shows that the company's revenue has maintained a double-digit growth rate, but profits are slightly lower than Wall Street analysts agree, and the profit outlook for the whole year has declined markedly. Third-quarter results announced on October 9 show that the high-end mobility and loyalty business is still resilient, yet energy shocks have weakened the transformation from revenue growth to profit. After the announcement of the latest results and outlook, as of the US stock market on Friday, the pre-market stock price of Delta once fell by about 4%, reflecting market concerns about the ability to deliver profits.
According to financial data, Delta's revenue growth was strong, but fuel costs eroded profits. Quarterly earnings fell slightly short of expectations, and the full-year profit outlook declined markedly. According to the data, Delta's revenue under GAAP standards for the third quarter was US$20.086 billion, up about 21% from US$16.673 billion in the same period last year; GAAP earnings per share were US$1.15, down from US$2.17 in the same period last year, down about 47% from the same period last year.
Under non-GAAP guidelines, after excluding third-party refining sales, Delta's third-quarter adjusted revenue was about US$17.585 billion, down from US$17.666 billion in the second quarter of 2026, but it hit a “record high for the same period”, up about 15.7% from US$15.197 billion in the same period last year, slightly lower than the Wall Street analysts' unanimous expectations of US$17.65 billion aggregated by MarketBeat. Adjusted earnings per share were $1.72, a slight increase from $1.70 in the same period last year in comparable terms in the latest financial report, but lower than Wall Street analysts' unanimous expectations of $1.76 compiled by LSEG, about 2.3%.
The midpoint of Delta's earnings per share guide for the fourth quarter was basically in line with expectations, but this meant it was still down about 10% year over year; the midpoint of the company's full-year adjusted profit guidance range was unexpectedly reduced by about 24% from the original $7 billion forecast; the company expects revenue growth of about 20% for the fourth quarter and free cash flow of about US$2.5 billion for the whole year, which is lower than the previous target forecast of US$3 billion to US$4 billion and far below the actual level of US$4.6 billion last year.
Delta's management expects fourth-quarter adjusted revenue to increase by about 20% year over year, with adjusted earnings of $1.15-1.65 per share: the midpoint of the range of $1.40 is basically in line with analysts' agreed expectations of $1.39, but it is down about 10% from $1.55 in the same period last year. The adjusted earnings per share guide for the full year was lowered from $6.50-$7.50 to $5.60. The midpoint of $5.35 is a sharp drop of 23.6% from the midpoint of the original guideline of $7, down about 8.1% from last year's actual $5.82, and lower than analysts' unanimous expectations of $5.46. Free cash flow for the full year is expected to be about 2.5 billion US dollars, which is lower than the previous target of 3 billion to 4 billion US dollars and the actual level of 4.6 billion US dollars last year.
Together, these data show that the travel demand and price increase ability of high-end business and high-income customers can still support revenue, yet they have not fully offset rising costs. Delta's third-quarter adjusted fuel spending increased 62% year over year, and adjusted operating margin fell from 11.1% to 9.4%. As a result, this report card on performance and future prospects shows the airline giant's operational resilience under high oil prices, yet it has yet to release a signal that profit margins will expand again.
Fares can't keep up with fuel: the aviation industry's real “profit scissor gap”
Crude oil experienced a brief decline in the third quarter, but this was not enough to relieve the huge cost pressure faced by airlines, and this pressure on energy costs is likely to continue to escalate in the fourth quarter. During the Asian session on October 9, Brent and WTI reported $102.91 and $90.40 respectively, up about 42% and 35% from the pre-war close on February 27. Trump said he had no plans to attack Iran before the midterm elections, and the news of the negotiations eased supply concerns, but the safety and navigation issues of energy navigation and navigation in the Strait of Hormuz and the Strait of Mander have not been resolved. Another important oil production site, the US Gulf of Mexico, was also impacted by the shutdown of production by the hurricane.
Direct costs for airlines depend on aviation kerosene prices and refining premiums. According to the latest monitoring by the International Aviation Association, the average global aviation kerosene price reached 187.34 US dollars/barrel, up 1% from the previous month. The blockage of energy transportation and the tight supply of refined oil products will amplify the transmission of rising crude oil prices to aviation fuel. The International Air Transport Association's June forecast predicts that ticket yields and air cargo yields will increase by 7% and 6.5% respectively this year, but the industry's net profit will still fall from 45 billion US dollars last year to 23 billion US dollars — the increase in freight rates focused here includes cost transfer, which is not equal to profit improvement.
Delta's third-quarter adjusted fuel spending increased 62% year over year, and operating margin fell from 11.1% to 9.4%; non-fuel unit costs also rose 7.3%. Even after accounting for the refinery's revenue of $0.40 per gallon, fuel costs are still expected to reach $4.25 per gallon in the fourth quarter, up about 18% from the third quarter. Own refineries can cushion the premium for refined oil products, but they cannot eliminate the upward pressure on the entire energy price system.
For aviation stocks, the most important factor at the level of expansion of the basic outlook is whether the increase in unit revenue can cover the increase in unit cost. However, the conventional mechanism of air tickets favoring early sale and subsequent fuel procurement and hedging makes it difficult to reprice tickets that have already been sold when costs suddenly rise. A research report by Deutsche Bank, a major international bank, predicts that the proportion of additional fuel costs recovered by the industry through revenue measures may decrease in the fourth quarter, and full recovery may take until the beginning of 2027.
For airlines, there is a lag in cost transfer: the price of tickets already sold is usually determined, and airlines mainly absorb the additional costs by adjusting subsequent ticket sales prices. Although Delta has offset some of the cost pressure by increasing ticket prices and optimizing the revenue structure, the increase in fuel spending still exceeds the revenue side's ability to make up, leading to a decline in profit margins and a reduction in profit guidance for the whole year.
High-end customer base supports demand, and the aviation industry chain enters segmented pricing
Compared to most airline peers, Delta still has a comparative advantage — both high-end revenue and loyalty revenue increased 18% in the third quarter, indicating that the premium customer base and member ecosystem can provide stronger revenue support; and it still plans to repay more than $2 billion throughout the year.
As far as aviation stocks are concerned, these capabilities help withstand energy shocks, but continued stock price recovery also requires stabilizing profit margins, improving cash flow, and stopping the decline in profit expectations. Delta's performance also highlights that aviation giants alone cannot complete valuation repairs with record revenue. Investors are still focused on when revenue growth can re-drive improvements in profit margins and free cash flow.
Projected upstream, high fuel prices have strengthened the economic value of fuel-efficient aircraft and engines, but shrinking airline cash flow will also limit procurement capacity; insufficient aircraft supply and extended life expectancy of old aircraft are beneficial to maintenance and engine after-sales needs. Delta's third-quarter repair business revenue increased 28%, supporting this demand lead. From this perspective, air transportation tests pricing and cost transfer even more, aircraft manufacturing tests delivery and customer payment capabilities, and maintenance business is more dependent on the intensity of use of active fleets.
High fuel prices can be described as amplifying the operating cost advantage of next-generation fuel-saving aircraft, enhancing the economic motivation of airlines to renew their fleets, and providing demand support for relevant aircraft and engine manufacturers.
The more expensive aviation fuel, the more operating expenses the same amount of fuel can be saved. With similar range, payload, and flight frequency, the new generation of aircraft reduces fuel consumption through more efficient engine and aerodynamic design; for example, Airbus says the A320neo series consumes about 20% less fuel per seat than the previous generation. Higher oil prices will amplify this part of the cost advantage and shorten the payback period for airlines to renew their fleets when other conditions remain the same, thereby increasing the attractiveness of fuel-saving models and their supporting engines.