Delta Cuts Annual Profit Forecast on Surging Fuel Costs; Shares Fall 3%

Delta Air Lines cut its annual profit forecast by nearly a quarter at the midpoint on Friday, citing fuel costs that overwhelmed travel demand and higher fares. Shares fell 3% in premarket trading. The Atlanta-based carrier now expects adjusted annual earnings of $5.10 to $5.60 a share, down from July's $6.50 to $7.50 guidance. The $5.35 midpoint trails analysts' average estimate of $5.46, per LSEG. Third-quarter adjusted earnings of $1.72 a share missed the $1.76 estimate, and adjusted operating margin fell to 9.4% from 11.1%. Delta expects its annual fuel bill to rise roughly $6 billion from last year. Third-quarter fuel expense jumped 62% year-on-year to $4.1 billion, over $500 million above July projections. CFO Erik Snell attributed the cut entirely to fuel, citing higher crude and jet fuel prices. Delta, the first major US carrier to report, forecast fourth-quarter adjusted earnings of $1.15 to $1.65 a share. United, American and Southwest report later this month.