Delta Air Lines missed Wall Street's profit expectations for the first time in two years and cut its 2026 profit guidance. CEO Ed Bastian said demand remains strong, and ticket prices continue to climb amid persistently elevated fuel costs. Since the outbreak of the US-Iran war in February, jet fuel prices have surged dramatically, becoming the airline's second-largest cost item after labor.

Due to persistently high fuel prices, Delta Air Lines (DAL) significantly lowered its 2026 earnings outlook, but CEO Ed Bastian said rising fares have not discouraged travelers. On Friday, the airline guided full-year adjusted earnings per share to a range of $5.10 to $5.60. Back in July, when oil prices were still low, the company had projected $6.50 to $7.50 per share. Its fourth-quarter guidance also fell short of analyst expectations. The company cut its full-year free cash flow forecast from up to $4 billion in July to $2.5 billion.

Even so, Bastian said in an interview that with fuel costs rising by $6 billion this year, the airline is passing most of the increase on to consumers, pushing ticket prices modestly higher, yet travelers keep booking. According to FactSet data, jet fuel prices in the US Gulf Coast region nearly doubled to $4.34 on Thursday from $2.19 a year earlier.

"What we're hearing from consumers is still quite strong. All sales channels, all cabin classes, all regions — whether business travel or leisure travel — demand is performing well," he said. Excluding the impact of gains from the Trainer refinery in Pennsylvania, Delta expects fourth-quarter revenue to grow 20% year over year, above the 16% increase in the third quarter. The refinery, which processes crude oil into jet fuel and other products, gives Delta a competitive advantage that other airlines lack.

"Obviously, fuel prices and their sharp volatility had an impact on this," Bastian said. Delta is the most profitable US airline and the first major carrier to report third-quarter results covering the peak summer travel season. Cost pressures continue to erode corporate profits. The US-Iran war in February drove oil prices higher, and even though airlines have some pricing power, profits remain under pressure. The latest September inflation data showed airfares rose more than 23% year over year.

Based on LSEG consensus estimates, here is how Delta's third-quarter results compared with Wall Street expectations: Adjusted earnings per share: $1.72 versus $1.75 expected. Adjusted revenue: $17.59 billion versus $17.67 billion expected. This marks the first time in two years that Delta fell short of market profit expectations. The company reported net income of $756 million, or $1.15 per share, compared with $1.42 billion, or $2.17 per share, in the same period a year earlier — a 47% year-over-year decline. Excluding one-time items, earnings per share came to $1.72.

After excluding refinery sales revenue, maintenance operations, and profit-sharing items, revenue rose 16% year over year to $17.59 billion. Third-quarter operating revenue jumped 21% to $20.19 billion. Premium services continued to account for a growing share of total revenue, with premium revenue up 18% to $6.82 billion in the third quarter, while standard economy revenue grew just 12% to $6.8 billion.

Spat with Musk

About four years ago, Delta announced it would equip its entire fleet with free onboard Wi-Fi. Recently, Delta said it would choose Amazon's Kuiper satellite internet service, as airlines race to bring onboard internet speeds up to home broadband levels. Last week, SpaceX CEO Elon Musk publicly criticized Bastian on X. This followed a report by travel blog View from the Wing that Bastian told employees at an internal meeting, "Trust me, we don't want to do business with Elon Musk," prompting Musk to post that Delta's CEO would "lose his job" over it. SpaceX's Starlink has become a leading supplier of onboard satellite Wi-Fi, partnering with airlines including United Airlines, American Airlines, Southwest Airlines, Alaska Airlines, and carriers around the world.

On Friday, Bastian downplayed the personal feud with Musk, saying in an interview: "Everyone is entitled to their own opinion." "On my side, there's no retaliation," Bastian said. He noted that Delta had held talks with SpaceX six years ago, but at the time the other party "wasn't ready for scaled deployment."