Delta Air Lines expects to incur roughly $2.5 billion in additional jet-fuel expenses this quarter as a consequence of the Iran war, Chief Executive Officer Ed Bastian said on Tuesday. The statement came during a videoconference at the Marsh Aviation Summit in London.
According to Bastian, the airline has seen its fuel costs roughly double within the past month. Faced with that rapid rise, he said Delta plans to seek ways to transfer the higher expense burden to travelers, while acknowledging that the process will take time.
"We have to find ways to get that cost passed through to consumers," Bastian said, adding that "it won’t happen overnight." He indicated the carrier is exploring a number of operational and financial responses to blunt the impact of the price surge.
Among the measures under consideration are temporary suspensions of routes that are currently unprofitable and deferring certain spending and capital expenditure plans. Those options are intended to limit near-term cash outflows while the airline works to adjust pricing and capacity.
The comments expand on remarks Bastian made about a week earlier, when he disclosed that Delta was trimming capacity by about 3.5% from levels it had planned at the start of the quarter. At that time, he also said the airline was implementing fare increases and was prepared to apply further increases beyond those already in place.
Despite the cost pressures, Bastian noted that bookings across Delta’s network for the second quarter and the summer season were strong. He argued that the carrier’s focus on higher-yield, premium customers provides some insulation against the fuel-driven revenue headwinds.
Delta’s combination of potential route adjustments, capital spending deferrals and selective fare hikes forms the carrier’s near-term response to the sudden escalation in jet-fuel prices tied to geopolitical developments. How quickly those actions can offset the roughly $2.5 billion hit to fuel spending is uncertain, and Bastian emphasized that passing costs through to consumers will be a process rather than an immediate fix.