Delta posts record $4.1B fuel bill, profit falls 25%
Oil futures were little changed Friday, with traders weighing the Trump administration’s ongoing technical negotiations with Iran against the latest exchange of strikes between the two countries. Front-month West Texas Intermediate crude rose 0.1% to $72.12 a barrel, while Brent crude edged up 0.3% to $76.52.
“Overall, the price action is consistent with the narrative that the market doesn’t think the hostilities are going to last,” TP ICAP analyst Scott Shelton said in a note. “The bigger picture after this war ends looks increasingly bleak when you look at balances and supply growth, though we have a large hole to fill on storage overall should we go into a supply/demand surplus to the extent that the IEA suggests.”
The steady prices came as ANZ Research analysts noted in a research report that markets drew “some reassurance from the Trump administration’s decision to avoid targeting Iranian energy infrastructure,” even as the U.S. ramped up attacks on military sites in Iran. As MSI previously reported, oil headed for a weekly gain as the Strait of Hormuz remained quiet despite the escalation.
Delta Air Lines, the first major carrier to report second-quarter results, gave an early signal of how the spring’s surge in jet fuel costs weighed on airline profitability. The company said fuel costs in the second quarter rose 67% year-over-year to $4.1 billion, the highest quarterly fuel expense in company history. The increase pushed total operating costs up 23% to $17.89 billion.
Higher ticket prices gave a significant boost to revenue but covered only 60% of the increase in fuel costs, according to CEO Ed Bastian. Delta’s second-quarter profit fell 25% to $1.6 billion, or $2.44 a share. The carrier owns a jet fuel refinery, which analysts said helped mitigate the impact of high fuel costs relative to its competitors.
In Asia, Malaysia’s data-center demand continues to support Tenaga Nasional’s expansion plans. RHB IB analyst Max Koh said in a note that under its generation plan, Tenaga aims to add 11.8 GW of new capacity by 2033, helping offset 6.6 GW of capacity scheduled for retirement while meeting rising electricity demand. Koh said data-center inquiries remain robust, supporting the utility’s plan to add 1 GW of new capacity annually. He also sees about 5% upside to the 16.50 ringgit target price if Tenaga wins the government’s new power generation tender, and expects the company’s effective tax rate to ease in coming quarters as tax incentives are applied. RHB maintains a buy rating on Tenaga. Shares were unchanged at 14.30 ringgit.
In early Asian trade, oil fell on expectations that U.S.-Iran tensions may be contained. ANZ Research analysts cited “expectations of limited military attacks between the U.S. and Iran.” Front-month WTI crude oil futures were 0.3% lower at $71.85 a barrel.