Hanoi:Delta Air Lines has announced that the sharp rise in jet fuel prices will add $6 billion to its expenses this year, marking a 60% increase over the previous year.
According to Yemen News Agency, The company reported that the average fuel cost reached $3.61 per gallon in the last quarter, despite owning a private refinery. Delta expects this cost to rise to $4.25 per gallon in the fourth quarter. The surge in fuel prices is attributed to the ongoing conflict involving Iran, which has disrupted oil shipments and damaged refineries, leading to a jet fuel shortage and prices rising faster than crude oil. In cities like New York and Los Angeles, prices have surpassed $4.90 per gallon.
Consequently, Delta has reduced its full-year earnings forecast by approximately 25%, expecting earnings per share to range between $5.10 and $5.60. These increased costs have also driven up ticket prices in the United States by 23.4% in August compared to the previous year. In response, airlines are cutting unprofitable flights and scaling back expansion plans.
Delta's CEO, Ed Bastian, acknowledged the uncertainty surrounding the timing of a decline in fuel prices but noted that structural changes in the sector might persist even after prices stabilize. He also mentioned that the industry has shown an ability to deliver greater value, with consumers accepting a 20% increase in ticket prices, which he views as a positive sign for the future despite the burden on travelers.
