Delta Air Lines warns fuel prices could stunt recovery

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Delta Air Lines warns fuel prices could stunt recovery

On Wednesday, Delta Air Lines Inc. warned that rising jet fuel prices were likely to stunt the airline s recovery from the COVID -19 pandemic.

Atlanta-based Delta sees fuel prices rise to $2.25 to $2.40 per gallon, up 40 cents from the September quarter quarter. A 5 cent increase in the price of fuel equates to about $30 million added expenses. The airlines spent $1.5 billion on fuel in the last quarter.

The falling fuel prices will pressure our ability to remain profitable in the December quarter, Delta CEO Ed Bastian said on Wednesday strikes at Delta's third-quarter earnings call.

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 would not hedge its fuel costs.

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 reported a third-quarter profit of $1.2 billion or $194 million in Monday, excluding government aid and other items. It was the company's first quarterly profit since the outbreak of COVID - 19 that included government aid without Government Aid.

The delta shares were up 8.3% this year against the S&P 500's 16% gain compared to Delta.