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Jet fuel costs have plunged. Here’s why Delta says cheaper flights aren’t on the way
CNN • • business
Key Points:
- Delta Air Lines reported that airfares have increased 11%-12% in the second quarter due to strong travel demand, and the airline expects these higher fares to be sustainable despite a recent drop in jet fuel prices.
- The company’s fuel costs rose 75% year-over-year in the quarter, driven by the US-Israeli war with Iran, raising adjusted fuel expenses by $1.9 billion, but higher fares helped passenger revenue increase by $1.7 billion.
- Delta projects a 20% reduction in fuel costs in the current quarter as oil prices have fallen close to pre-war levels, with jet fuel spot prices down 36% from their peak.
- CEO Ed Bastian noted that fares remain below pre-pandemic levels when adjusted for inflation, and that demand is supported by wealthier passengers prioritizing travel, with premium cabin revenue up 17%.
- Despite a 26% drop in adjusted income due to fuel costs, Delta exceeded Wall Street earnings expectations and maintains its full-year earnings forecast set before the fuel price surge.
