Delta is scaling back its schedule this quarter to ameliorate the impact of what it expects will be a fuel bill that is more than $2 billion higher than it had anticipated before the Iran war began.
"We are meaningfully reducing capacity in the current quarter with a downward bias until we see the fuel situation improve," CEO Ed Bastian said during Wednesday morning's Q1 earnings call.
The airline's plan prior to the year called for capacity growth of approximately 3% compared to 2025. In the second quarter, Delta now expects its flying to be on par with last year.
The airline projects that lower capacity, coupled with what it says continues to be strong demand across all cabins and throughout almost all its network, will enable it to recapture 40% to 50% of those increased fuel expenses in the second quarter through higher airfares and ancillary fees, including the $10 increase in checked bags fees that it introduced Wednesday.
Delta also expects to benefit from its ownership of a refinery, unique among U.S. airlines, which it said will drive $300 million in fuel savings in the second quarter.
The announcements echo broad expectations in the airline industry that fuel costs will remain high for a while, regardless of what happens next in the Iran war, where a two-week cease took effect on April 7.
Delta said its flying reductions will focus on off-peak times, including early and late flights as well as red-eyes.
Delta's near-term forecast
Despite fuel costs that have roughly doubled during this calendar year, Delta remains relatively bullish in the near term. On Wednesday, the airline reported first-quarter operating revenue of $15.85 billion, up 13% from last year on just 1% of additional capacity. Passenger yields, which correlate significantly with airfares, were up 6%.
Operating expenses, including a 14% jump in fuel expenses, were $15.35 billion.
The airline's operating income for the first quarter was $501 million, down 12% from last year, when fear over tariffs led to weakened demand, but with much lower fuel costs.
Delta reported a net loss for the first quarter of $289 million, driven by $550 million in unrealized investment losses rather than by operations.
With demand remaining strong, Delta projects a pre-tax profit of approximately $1 billion for the second quarter, with an operating margin of 6% to 8%.
The airline said it expects to increase its ability to recapture high fuel costs as the year progresses, an outcome that will be driven in-part by the gradual diminishment of bookings that were made before fuel spiked.
Still, Delta isn't ready to project overall results for 2026 due to fuel price volatility.
Bastian said that the airline's strong balance sheet, its refinery and the relative affluence of its customer base leave it better positioned than other carriers to withstand the fuel spike.
"While higher fuel is a current impact to earnings, I'm confident this environment ultimately re-enforces Delta's leadership and accelerates our long-term earnings power," he said.
Delta stock was up approximately 6% in early afternoon trading, echoing increases across the U.S. airline sector as investors responded to the Iran war ceasefire.