Delta expects more than $2 billion in extra jet fuel costs from Iran war

Delta Air Lines says high jet fuel prices could cost it an extra $2 billion in the second quarter, as the Iran war continues to have global economic impact.

Its first quarter fuel costs jumped by $332 million, the Atlanta-based airline reported Wednesday.

Delta is the first major U.S. airline to report quarterly earnings since the war broke out in late February and the cost of jet fuel soared. Jet fuel is one of airlines’ biggest expenses, and according to the International Air Transport Association, prices have more than doubled since the conflict began.

The “extreme” price hike could result in “lasting change and structural reform” across the industry, Delta CEO Ed Bastian told reporters.

“We’ve seen $100 oil prices in the past, but not within the time horizon we’re seeing here so quickly.”

And that change is already happening “in front of your eyes,” he said. “We announced that we’re taking our growth out … you can imagine others are in even worse shape.”

The U.S. and Iran agreed to a two-week ceasefire late Tuesday, but details of its implications remained unclear.

Even as Delta saw strong demand and 10% higher revenue in the first three months of 2026 compared with 2025, the airline is removing all planned flight capacity growth from its second quarter schedule, amounting to about a 3.5% cut.

Summer travel demand across all groups looks strong for Delta, executives told analysts Wednesday.

But Bastian predicted industry flight capacity will drop “in a pretty significant way.”

Delta on Tuesday also announced it would hike checked baggage fees by between $10 and $50, following competitors’ decision to do the same.

Historically, high fuel prices “more than any other factor have created that sense of urgency amongst the industry to either improve through performance, improve through rationalization, improve through consolidation, or face being eliminated, candidly,” Bastian said.

When asked by analysts on Wednesday morning about the ceasefire, Bastian said, “We do expect, hopefully, that fuel settles down.“

“Now it’ll settle down, I think, at a higher level than where we had in the plan, so fuel recapture is going to be important no matter what we do.”

Bastian said Delta hopes to recoup 40%-50% of the $2 billion in extra jet fuel costs during the second quarter.

He said the company’s goal is to ultimately recapture all the extra fuel costs.

In addition to the higher bag fees, airlines also raise fares to cover unexpected expenses like jet fuel hikes.

Bastian argues Delta is “uniquely advantaged” to weather the higher fuel costs given its higher-income target customer and a “very strong balance sheet,”

“It’s hard if you’re an airline that’s in a poor margin position to shrink your way to profitability,” he said.

Delta also predicts it will see a $300 million net benefit from its oil refinery in the second quarter. A delayed effect of the fuel price spike on the refinery meant that its benefit for the first quarter amounted to just $60 million, Bastian said.

For the first quarter of 2026, Delta on Wednesday reported a loss of $289 million on revenue of $15.9 billion. When adjusted for gains and losses on equity investments, paying off debt and gains on sale of investments, the company reported a quarterly profit of $423 million.

The company does expect it will make a roughly $1 billion pretax second quarter profit, but didn’t walk back or reaffirm its year-end financial guidance, “given all of the uncertainty around the fuel environment,” Bastian said.

“We woke up this morning with a very different set of fuel assumptions than when we went to bed,” Bastian told analysts Wednesday. The company won’t be able to offer longer-term guidance “until we have a better sense for where structurally we see oil landing.”

The news marks yet another year in which federal government actions have affected the airline’s first quarter earnings.

In April of last year, Delta was forced to backtrack on its promises of its most profitable year in history because of the Trump administration’s tariff policies’ effect on travel demand. The airline cut capacity growth in the back half of 2025 as a result.

Unlike last year, however, revenue and travel demand still look strong right now, Bastian noted. Last year was “a much more difficult wild card,” he said.

Bastian declined to speculate on whether the baggage fees would change again. “All I can tell you is that we have not increased our bag fees in quite some time, and at this level of fuel, it’s hard to call anything temporary.”