Delta says fuel price surge will cause quarterly loss
Delta sees fuel prices rising by up to 40 cents per gallon
FOX Business' Hillary Vaughn discusses how U.S. airlines are going green for a cost.
Delta Air Lines Inc. warned on Wednesday that rising jet fuel prices were likely to stunt the airline’s recovery from the COVID-19 pandemic.
The Atlanta-based Delta sees fuel prices rising to $2.25 to $2.40 per gallon, up 40 cents from the September quarter. A 5 cent increase in the price of fuel equates to about $40 million in added expenses. The airlines spent $1.5 billion on fuel last quarter.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| DAL | DELTA AIR LINES INC. | 64.03 | -0.81 | -1.24% |
Rising fuel prices "will pressure our ability to remain profitable in the December quarter," Delta CEO Ed Bastian said on the company’s third-quarter earnings call on Wednesday.
He sees Delta posting a "modest loss" in the December quarter with crude oil prices up more than 60% year to date and 15% over the last month. The airline doe not hedge its fuel costs.
GET FOX BUSINESS ON THE GO BY CLICKING HERE.
Even with the near-term headwind from higher fuel costs, the company expects to return to profitability in 2022 as air travel continues to recover and capacity is restored.
Delta on Tuesday reported a third-quarter profit of $1.2 billion, or $194 million excluding government aid and other items. It was the company’s first quarterly profit without including government aid since the outbreak of COVID-19.
DELTA AIR LINES DELIVERS A PROFIT, BUT FACES FUEL-COST PRESSURE
Delta shares were up 8.3% this year through Tuesday compared with the S&P 500’s 16% gain.