Delta Stock Drops On Cautious Earnings View In Q4 & FY27 After Weak Q3

(RTTNews) - Shares of Delta Air Lines, Inc. were losing around 3 percent in the morning trading on the NYSE after the airline reported weak third-quarter earnings, issued cautious earnings view for the fourth quarter and trimmed fiscal 2027 earnings view amid high fuel cost environment.

However, the company projects higher revenues for the fourth quarter, extending the strong third-quarter revenue performance with growth across all geographies on broad demand strength and healthy yield growth.

Ed Bastian, Delta's chief executive officer, stated, "Demand remains strong, supported by consumers' growing preference for experiences and travel, with air travel continuing to be one of the best values in the consumer economy. ... For the full year, we expect to generate a pre-tax profit of roughly $4.5 billion, absorbing a $6 billion increase in fuel costs. Looking ahead, our focus remains on profitable growth and delivering against our long-term financial framework, including mid-teens margins and returns, durable free cash flow and gross leverage of approximately one times."

Looking ahead for the fourth quarter, the company projects adjusted earnings of $1.15 to $1.65 per share, adjusted operating margin of 7 percent to 9 percent, and total revenue growth of around 20 percent year-over-year with expected continued momentum. The projected all-in fuel price for the quarter would be approximately $4.25 per gallon.

In the prior year's fourth quarter, the company had recorded earnings of $1.86 per share on revenue of $16.003 billion.

The company noted that revenue momentum is continuing in the December quarter, with strength across all products and geographies. With seats growing less than 2 percent, including a reduction in Main Cabin seats, the firm projects another quarter of sequential improvement in unit revenue with progression in both Domestic and International.

Further, for fiscal 2026, Delta now expects adjusted earnings per share of $5.10 to $5.60, lower than previous guidance in the range of $6.50 to $7.50 per share.

Free cash flow for the full year would be approximately $2.5 billion with a double-digit return on invested capital.

In the third quarter, Delta Air Lines' net income dropped 47 percent to $756 million or $1.15 per share from $1.417 billion or $2.17 per share last year.

Adjusted earnings were $1.134 billion or $1.72 per share for the period, compared to $1.114 billion or $1.70 per share a year ago.

Delta absorbed more than $500 million of higher fuel costs compared to its guidance in early July.

Adjusted operating income of $1.66 billion fell 2 percent from the prior year, and adjusted operating margin of 9.4 percent dropped from 11.1 percent a year ago.

The company's operating revenue for the period rose 21.1 percent to $20.186 billion from $16.673 billion last year.

Adjusted operating revenue was $17.59 billion, up 16 percent year-over-year, on flat capacity, driven by broad demand strength and healthy yield growth.

Adjusted total unit revenue grew 15 percent over prior year. Main cabin unit revenue grew 17 percent on seats down low-single digits.

Domestic unit revenue grew 16 percent year-over-year on strong yields and higher load factor. International unit revenue increased 12 percent, with performance led by Latin where unit revenue improved 22 percent over last year.

On the NYSE, the shares were trading at $79.62, down 3.12 percent.

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