(Bloomberg) – Delta Air Lines Inc. posted the biggest drop in the S&P 500 and its biggest one-day decline in a year after warning that rising fuel costs would threaten earnings this quarter. Caution also weighed on other carriers.

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The Atlanta-based airline has reported quarterly profit without first aid among major U.S. carriers since the start of the pandemic, even as the delta variant of the coronavirus has reduced demand.

Third-quarter net profit, excluding state aid of $ 1.3 billion, was $ 194 million, or 30 cents per share, the airline said on Wednesday. Analysts had expected 17 cents, according to the average of estimates compiled by Bloomberg. Airlines posted profits during the pandemic that were helped by federal funds.

But Delta warned that it would likely revert to red ink in the current quarter, mainly due to rising jet fuel costs, which are expected to average $ 2.40 per gallon, from $ 1.94 in the past. third trimester.

“This will limit our ability to post profit in the quarter. At these current fuel levels, it looks like we’ll have a modest loss, ”CEO Ed Bastian said in an interview. Fuel prices have increased 60% this year, he said.

Delta fell 5.8% to $ 41.03 on close in New York, biggest drop

since October 26. American Airlines Group Inc. and United Airlines Holdings Inc. were also among the 10 weakest in the S&P 500.

Delta is the first major US carrier to report third quarter results. United, American and Southwest Airlines Co. are expected to release their results next week.

The 11 largest U.S. airlines are expected to post a combined operating loss of $ 694 million and a pre-tax loss of $ 1.9 billion for the quarter, according to Deutsche Bank analyst Michael Linenberg.

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Delta had recorded five consecutive quarterly losses after the pandemic struck in March 2020 and wiped out global travel demand. Third-quarter revenue, excluding refinery sales, was $ 8.3 billion, down from $ 8.45 billion expected by analysts.

A drop in bookings for the delta variant of the coronavirus bottomed out in September, and the airline saw improving demand, including a rebound in domestic business travel.

The carrier expects fourth quarter revenue to hit the low 70% range from 2019 levels, down from 66% in the third. The costs for each seat driven per mile, a measure of efficiency, excluding fuel, will increase by up to 8% compared to quarter 2019.

The airline and other carriers are counting on reopening US borders for travel from the UK and mainland Europe next month to boost international travel, especially for business passengers. The vital transatlantic market remained hampered by a variety of testing and quarantine requirements between countries.

Half of Delta’s passenger revenue in 2019 came from corporate accounts, and the company said its greatest potential for growth is in international markets. Bookings for transatlantic flights to the United States increased tenfold overnight after the United States announced in September that it would lift restrictions.

Those bookings between the US and UK remain “very strong,” Bastian said in the interview, before Delta released the results.

“I feel very good with what we see in bookings and demand expectations on many levels. “

Delta remains the only hurdle among America’s biggest airlines when it comes to requiring employees to be vaccinated against Covid-19, even after their American and Southwestern peers said on Tuesday they would defy a ban of Texas compulsory vaccination to meet federal requirements. Delta and other carriers with federal contracts have been ordered to comply with White House policy.

About 90% of Delta workers have been vaccinated, and that number is expected to rise to 95% by November before taking exemptions into account. Bastian said he hopes to achieve 100% employee compliance without the need for shots. The airline plans to impose a monthly insurance surcharge of $ 200 on workers who are not vaccinated by November 1.

“I would like to continue to work with our people, trust our people to make the right decision, trust their decision and not have to threaten them with losing their jobs,” he said.

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