Oct 14, 2021 - Economy

Delta Air Lines CEO warns fuel costs could dig into profits

Photo of a Delta Airlines plane.

Photo: Nicolas Economou via Getty Images

Delta Air Lines’ biggest concern for the fourth quarter isn’t “the variant” — as CEO Ed Bastian refers to it — it’s fuel costs.

The big picture: Warnings like Delta's are a natural result of the global fuel chaos.

Driving the news: Delta reported earnings Wednesday, booking its first quarterly profit (without federal aid) since the start of the pandemic.

  • The company has a number of tailwinds. For one, bookings have increased — including for business travel — since COVID cases started receding last month.
  • Overall revenue is expected to hit 75% of pre-pandemic levels by the end of the year, from just 25% at the start (and that’s without most international travel).

But, but, but: Just how much the cost of jet fuel rises, and how long it stays there, will determine whether the airline turns a profit in Q4, Bastian told CNBC.

  • Fuel is Delta’s second-largest individual cost, after labor. “It's up 60% this year, and almost 20% just in the last month or so,” he said.

The bottom line: Higher energy costs are likely to show up as risk factors in more companies' Q3 earnings comments.

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