What's going on?

Delta Air Lines saw its stock price climb almost 5% on Thursday following its latest earnings figures, capping a very strong week for US airlines.

What does this mean?

Delta�s earnings beat Wall Street�s expectations for both profit and the crucial airline benchmark of �unit revenue�� how much revenue it gets per seat for each mile flown. Delta�s costs, however, also rose, and at the fastest pace in four years � leading to some concerns about its profitability in 2018. Nevertheless, investors appeared to take Delta�s CEO at face value when he said that an improving economy would help boost revenue by enough to offset increased costs � meaning more profit touching down at Delta�s Atlanta HQ.

Why should I care?

The bigger picture: The oil price is going up � if sustained, that will hurt airlines� profits.

Airlines have benefited in recent years from the historically low oil price, which has fed through into lower jet fuel prices (a huge cost for airlines). Virtually all airlines take some of the risk out of their business models by buying financial products linked to the price of oil (essentially paying for some of their fuel needs years in advance). But there�s still a significant risk to airlines� profits from the rising oil price � which hit its highest level in almost three years this week.


For markets: US airlines have had a great week.

Other airlines, including United and American, also increased their unit-revenue forecasts, helping to push up their stock prices. More broadly, Wall Street expects airlines to benefit from the recently passed tax cuts. For one, the airlines are expecting a pickup in business travel as companies have more money to spend. Also, these airlines do most of their business within the US, which means they�re better positioned to benefit from the tax cuts than US firms with weightier international operations.