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Is Airline ETF in a Tough Spot as Fuel Costs Threaten Q3 Profits?
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Key Takeaways
Delta cut its 2026 earnings forecast as fuel costs surged.
Airline earnings face pressure despite resilient travel demand.
Capacity discipline could support airline ETFs like JETS.
Delta Air Lines (DAL - Free Report) cut its 2026 adjusted earnings forecast by nearly 25% as surging jet fuel prices, driven by the Iran war, pushed its expected annual fuel bill up by $6 billion from 2025. Despite strong travel demand and higher ticket prices, rising costs are squeezing airline profitability.
Inside Earnings Result
Delta Air Lines reported somewhat disappointing third-quarter results on Friday, missing both earnings and revenue expectations as surging fuel costs pressured profitability despite record revenue and resilient travel demand.
Delta posted adjusted Q3 earnings of $1.72 per share, missing the Zacks EPS Consensus of $1.80 by 4%. Earnings were essentially flat compared with $1.71 per share in the year-ago quarter.
Adjusted revenue increased 16% year over year to a record $17.59 billion but fell short of expectations of $17.71 billion. Premium and loyalty revenue each climbed 18%, reflecting continued strength among higher-spending travelers.
However, adjusted fuel expenses surged 62% year over year to $4.14 billion, significantly limiting profitability despite stronger ticket pricing and disciplined capacity management.
Image Source: Zacks Investment Research
Capacity Discipline Becomes Crucial
Delta warned that U.S. airlines may need to restrain flight growth further in 2027 to protect margins. While limited seat growth has helped carriers raise fares, excessive capacity expansion could intensify competition and weaken pricing power.
What’s Ahead of Other Industry Players in Q3 Earnings Season?
Let's examine the earnings outlook for other major airlines, whose results and guidance could influence the sector's performance.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for PepsiCo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
United Airlines (UAL - Free Report) , and Alaska Air Group (ALK - Free Report) will report on Oct. 20 while American Airlines (AAL - Free Report) , Southwest Airlines (LUV - Free Report) , and JetBlue Airways (JBLU - Free Report) will report on Oct. 22, Oct. 21, Oct. 27, respectively.
UAL has a Zacks Rank #5 and an Earnings ESP of +0.17%.
ALK has a Zacks Rank #5 and an Earnings ESP of +4.35%.
AAL has a Zacks Rank #3 and an Earnings ESP of -2.66%.
LUV has a Zacks Rank #3 and an Earnings ESP of -4.13%.
JBLU has a Zacks Rank #4 and an Earnings ESP of -4.31%.
Inside Earnings & Revenue Growth Expectations
Below are the Zacks Consensus Estimates for third-quarter earnings per share (EPS) and revenues for the five major airlines, as of Oct. 8, 2026.
UAL: EPS of $5.94 (Down 3.6% year over year) on revenues of $17.85 billion (up 17.25% year over year)
ALK: EPS of $0.35 (Down 67% year over year) on revenues of $4.31 billion (up 14.52% year over year)
AAL: Loss per share of $0.28 (loss widened by 64.7% year over year) on revenues of $16.19 billion (up 18.27% year over year)
LUV: EPS of $0.61 (up 454.6% year over year) on revenues of $8.26 billion (up 18.8% year over year)
JBLU: Loss per share of $0.52 (loss widened by 30% year over year) on revenues of $2.82 billion (up 21.4% year over year)
What It Means for Airline ETF
Persistent fuel-cost pressures and uncertain profit margins could weigh on pure-play airlines ETF the U.S. Global Jets ETF (JETS - Free Report) , which provides exposure to major airlines. The sector's outlook will depend on fuel prices, the sustainability of airfares and capacity discipline.
Pure-play airlines ETF U.S. Global Jets ETF (JETS - Free Report) is down 3% so far this year but has gained 6.4% over the past six months. Over the past one month, the fund is off 2.6% (as of Oct. 8, 2026).
Ultimately, the outlook for airline ETFs will depend on earnings commentary and forward guidance from industry players. If more airlines announce capacity cuts to protect profitability, the resulting improvement in supply-demand dynamics could support airline stocks and ETF such as JETS.
View the Zacks #1 Rank List
Image: Bigstock
Is Airline ETF in a Tough Spot as Fuel Costs Threaten Q3 Profits?
Key Takeaways
Delta Air Lines (DAL - Free Report) cut its 2026 adjusted earnings forecast by nearly 25% as surging jet fuel prices, driven by the Iran war, pushed its expected annual fuel bill up by $6 billion from 2025. Despite strong travel demand and higher ticket prices, rising costs are squeezing airline profitability.
Inside Earnings Result
Delta Air Lines reported somewhat disappointing third-quarter results on Friday, missing both earnings and revenue expectations as surging fuel costs pressured profitability despite record revenue and resilient travel demand.
Delta posted adjusted Q3 earnings of $1.72 per share, missing the Zacks EPS Consensus of $1.80 by 4%. Earnings were essentially flat compared with $1.71 per share in the year-ago quarter.
Adjusted revenue increased 16% year over year to a record $17.59 billion but fell short of expectations of $17.71 billion. Premium and loyalty revenue each climbed 18%, reflecting continued strength among higher-spending travelers.
However, adjusted fuel expenses surged 62% year over year to $4.14 billion, significantly limiting profitability despite stronger ticket pricing and disciplined capacity management.
Image Source: Zacks Investment Research
Capacity Discipline Becomes Crucial
Delta warned that U.S. airlines may need to restrain flight growth further in 2027 to protect margins. While limited seat growth has helped carriers raise fares, excessive capacity expansion could intensify competition and weaken pricing power.
What’s Ahead of Other Industry Players in Q3 Earnings Season?
Let's examine the earnings outlook for other major airlines, whose results and guidance could influence the sector's performance.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for PepsiCo this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Inside Our Surprise Prediction
United Airlines (UAL - Free Report) , and Alaska Air Group (ALK - Free Report) will report on Oct. 20 while American Airlines (AAL - Free Report) , Southwest Airlines (LUV - Free Report) , and JetBlue Airways (JBLU - Free Report) will report on Oct. 22, Oct. 21, Oct. 27, respectively.
UAL has a Zacks Rank #5 and an Earnings ESP of +0.17%.
ALK has a Zacks Rank #5 and an Earnings ESP of +4.35%.
AAL has a Zacks Rank #3 and an Earnings ESP of -2.66%.
LUV has a Zacks Rank #3 and an Earnings ESP of -4.13%.
JBLU has a Zacks Rank #4 and an Earnings ESP of -4.31%.
Inside Earnings & Revenue Growth Expectations
Below are the Zacks Consensus Estimates for third-quarter earnings per share (EPS) and revenues for the five major airlines, as of Oct. 8, 2026.
UAL: EPS of $5.94 (Down 3.6% year over year) on revenues of $17.85 billion (up 17.25% year over year)
ALK: EPS of $0.35 (Down 67% year over year) on revenues of $4.31 billion (up 14.52% year over year)
AAL: Loss per share of $0.28 (loss widened by 64.7% year over year) on revenues of $16.19 billion (up 18.27% year over year)
LUV: EPS of $0.61 (up 454.6% year over year) on revenues of $8.26 billion (up 18.8% year over year)
JBLU: Loss per share of $0.52 (loss widened by 30% year over year) on revenues of $2.82 billion (up 21.4% year over year)
What It Means for Airline ETF
Persistent fuel-cost pressures and uncertain profit margins could weigh on pure-play airlines ETF the U.S. Global Jets ETF (JETS - Free Report) , which provides exposure to major airlines. The sector's outlook will depend on fuel prices, the sustainability of airfares and capacity discipline.
Pure-play airlines ETF U.S. Global Jets ETF (JETS - Free Report) is down 3% so far this year but has gained 6.4% over the past six months. Over the past one month, the fund is off 2.6% (as of Oct. 8, 2026).
Ultimately, the outlook for airline ETFs will depend on earnings commentary and forward guidance from industry players. If more airlines announce capacity cuts to protect profitability, the resulting improvement in supply-demand dynamics could support airline stocks and ETF such as JETS.