Delta CEO says higher airfares can sustain 2026 profit goal
Delta Air Lines CEO Ed Bastian told CNBC he expects higher airfares to last even as fuel prices ease from multi-year highs, helping keep the carrier's original 2026 profit goal in reach as the airline passes higher fuel bills along to customers. DAL stock investors got a boost Friday as Delta beat Q2 estimates with $1.56 adjusted EPS and reaffirmed full-year guidance of $6.50 to $7.50 per share.
Key Takeaways
- Delta reported Q2 adjusted EPS of $1.56, topping analyst estimates near $1.50.
- CEO Ed Bastian expects firm airfares to persist despite a recent slide in oil prices.
- Full-year 2026 EPS guidance reaffirmed at $6.50 to $7.50, with $3 billion to $4 billion in free cash flow.
- The carrier passed roughly 60% of higher fuel costs to consumers and aims to approach 100% this quarter.
- Third-quarter EPS forecast set at $2.00 to $2.50 on mid-teens revenue growth.
Why does Delta expect higher airfares to last?
Bastian told CNBC that the pricing power is sustainable. He cited robust travel demand, a wider mix of seat options, and a more disciplined airline industry that has scaled back growth plans and pruned unprofitable flights after this year's record fuel run-up.
Federal data cited by CNBC showed May airfares up nearly 27% year over year. Bastian said Delta was passing along about 60% of its higher fuel bill to consumers in the second quarter and expected that figure to get close to 100% in the current quarter.
Carriers across the industry are not likely to expand capacity quickly even if oil prices fall further, Bastian added. That restraint, combined with strong demand, underpins his view that fares will stay firm.
How did Delta perform in the second quarter of 2026?
Delta was the first major U.S. airline to report second-quarter results. The company delivered $1.4 billion in pre-tax profit on an adjusted basis while absorbing what it called the highest quarterly fuel expense in its history, according to its official earnings release.
Adjusted operating revenue rose 14% to a record $17.7 billion on roughly 1% capacity growth. The airline posted an 8.8% operating margin and $1.56 in adjusted earnings per share, above the company's own guidance and ahead of Wall Street consensus near $1.50.
Adjusted fuel expense totaled $4.4 billion, up 77% year over year. Delta also announced a 15% dividend increase beginning in the September quarter and continued debt paydown toward roughly 2x gross leverage by year-end.
What is Delta's outlook for the rest of 2026?
For the third quarter, Delta projects adjusted EPS of $2.00 to $2.50, compared with analyst estimates near $2.02. Revenue is expected to grow in the mid-teens versus the same period in 2025, with an operating margin of 11% to 13%.
The carrier reaffirmed its January full-year target of $6.50 to $7.50 in adjusted EPS and $3 billion to $4 billion in free cash flow. Management said it still aims to grow earnings roughly 20% for the year, overcoming a multi-billion-dollar fuel headwind.
For investors tracking net worth and wealth trends in airline equities, Bastian's confidence in lasting fare strength is the headline. If demand holds and rivals stay disciplined, Delta's original 2026 profit goal remains firmly in play.