Delta Cuts Full-Year Outlook After Fuel Spike
The carrier now sees adjusted earnings of $5.10 to $5.60 a share and about $2.5 billion of free cash flow for 2026.
Delta Air Lines (DAL) cut its full-year 2026 outlook after absorbing a sharper fuel spike than it had planned, even as adjusted revenue growth accelerated for a second straight quarter.
The Atlanta-based airline now expects adjusted earnings of $5.10 to $5.60 a share and free cash flow of approximately $2.5 billion for the full year, down from the $6.50 to $7.50 earnings range and $3 billion to $4 billion of free cash flow it affirmed after the June quarter. Chief Financial Officer Erik Snell said the company absorbed more than $500 million of higher fuel costs versus guidance issued in early July.
Adjusted total revenue growth quickened to 16% year over year in the September quarter, after 14% in the June quarter and 9.4% in the March quarter, on flat capacity. Adjusted total unit revenue, or TRASM, grew 15%, accelerating 3 points from the prior quarter. Chief Commercial Officer Joe Esposito said the company was covering higher costs and managing the business for margins.
GAAP operating revenue was $20.2 billion. Adjusted operating revenue was $17.6 billion. Adjusted operating income was $1.7 billion, with an adjusted operating margin of 9.4%. Adjusted diluted earnings were $1.72 a share, in line with last year. GAAP operating income was $1.5 billion, with a 7.2% margin, and GAAP diluted earnings were $1.15 a share.
Adjusted fuel expense was $4.1 billion, with an adjusted fuel price of $3.61 a gallon. Non-fuel CASM was 14.03 cents, up 7.3% year over year on flat capacity. Snell attributed the non-fuel increase primarily to higher crew and revenue-related costs on capacity growth that ran several points below the original plan, including nearly one point of impact from summer storms.
Domestic unit revenue grew 16% on a 15% yield increase and flat capacity, with load factor 1 point higher than last year. International unit revenue rose 12%, led by Latin America, where unit revenue improved 22%. Transatlantic unit revenue growth improved 4 points sequentially to 11% year over year. Transpacific revenue grew 13% on 8% higher capacity.
Premium revenue grew 18% year over year on a 6% increase in seats. Cargo revenue increased 29%, and MRO revenue grew 28%. Diverse revenue streams accounted for 61% of total revenue. Total loyalty revenue grew 18%.
Free cash flow was $463 million, down 44% from $833 million a year earlier, on $1.7 billion of adjusted operating cash flow and $1.4 billion of gross capital expenditures. Adjusted net debt was $13.4 billion at quarter-end, a $950 million reduction from the end of 2025, after $1.2 billion of payments on debt and finance lease obligations. Liquidity was $6.9 billion, including $3.1 billion in undrawn revolver capacity.
For the December quarter, Delta expects total revenue growth of approximately 20% year over year and earnings of $1.15 to $1.65 a share, versus September-quarter guidance of mid-teens revenue growth and $2.00 to $2.50 a share issued in July. That outlook assumes fuel at the forward curve as of October 2, 2026, including a refinery benefit of about $0.40 a gallon, for a projected all-in fuel price of approximately $4.25 a gallon. Esposito said seats are growing less than 2%, including a reduction in Main Cabin seats, and that capacity positioning supports another quarter of sequential improvement in unit revenue in both Domestic and International.
Snell said December-quarter non-fuel unit cost growth is expected to improve 1 to 2 points sequentially, with low-single-digit unit cost growth remaining on track for next year as capacity normalizes. For the full year, the company said it expects pre-tax profit of roughly $4.5 billion, absorbing a $6 billion increase in fuel costs, and plans to pay down more than $2 billion of debt, ending 2026 with gross leverage of approximately 2.2 times.