American Airlines and United Airlines have lowered their 2026 earnings projections this week, citing unexpectedly high jet fuel expenses that are eroding profits across the industry. Fuel costs soared by 69% since airstrikes began in Iran seven weeks ago, according to the Argus U.S. Jet Fuel Index. This surge directly impacts the everyday cost of travel for millions of working families, say industry analysts.
The financial strain became evident with first-quarter earnings reports, revealing a complex picture where robust revenue growth could not outpace the escalating cost of operations. While all four major U.S. carriers – American, Delta, United, and Southwest – posted record revenue for the first three months of 2026, the gains quickly evaporated. American Airlines and Delta Air Lines ultimately ended the quarter in the red.
This situation illustrates a stark economic reality: the policy says one thing about revenue growth, but the reality of operational costs dictates the actual bottom line. American Airlines specifically informed investors that its jet fuel expenditures are projected to climb by an additional $4 billion over the course of 2026. This represents a significant and sudden drain on resources.
Delta Air Lines, another major player, anticipates its fuel bill will be $2 billion higher in the second quarter alone. Bob Jordan, CEO of Southwest Airlines, called the jet fuel situation "a billion dollar headwind" for his company in the second quarter during an investor call on Thursday. These are not abstract figures; these are direct costs that will inevitably reshape airline strategy and, ultimately, passenger experience.
The primary driver behind this rapid escalation traces back to the Middle East. Jet fuel was trading at $4.23 a gallon on Wednesday, according to the Argus U.S. This price marks a 69% increase since the United States and Israel initiated airstrikes on Iran more than seven weeks ago.
The geopolitical conflict translates directly into higher operational costs for every flight. The Dow Jones U.S. Airline Index reflects this, showing an 8% decline on Thursday compared to its value before the Iran war began.
Devon May, American Airlines finance chief, articulated the challenge to investors on Thursday. "The increase in jet fuel prices kept this from being a profitable quarter," May stated. The company reported spending an extra $400 million on jet fuel in the first quarter alone. Nearly all of that additional expense materialized during March, following the outbreak of hostilities in Iran.
For the everyday traveler, these increased costs have already translated into tangible changes. Southwest Airlines noted that there have been six "broad, industry-wide fare moves," which are essentially airfare hikes, since the Iran conflict escalated nearly eight weeks ago. What this actually means for your family is that the price you pay for a summer vacation or a visit home has likely increased, even if the airline itself struggles to make a profit.
This is the direct human impact. While the United States produces 13 million barrels of oil daily and imports roughly four million barrels daily from Canada, offering a degree of insulation compared to other nations, this has not prevented domestic carriers from feeling the squeeze. Patrick De Haan, head of petroleum analysis at GasBuddy, observed that U.S. airlines are "a bit more insulated" from jet fuel spikes than their international counterparts.
Despite this, the economic bleeding is evident. Three carriers are particularly vulnerable: budget airlines Frontier and JetBlue, which have struggled with profitability since the Covid pandemic, and ultra-low-cost carrier Spirit Airlines. Spirit is currently operating under Chapter 11 bankruptcy and is reportedly in "advanced stages" of negotiating a $500 million bailout with the Trump administration.
Among the nation's stronger carriers, Alaska Airlines also experienced a significant hit. The airline announced Monday it had pulled its 2026 forecast and reported a first-quarter net loss of $193 million, missing estimates. This setback came after the carrier absorbed over $100 million in higher fuel costs.
United Airlines has indicated it might trim as much as 5% of its scheduled flights in the third quarter if fuel prices do not stabilize. Fewer flights are coming. Delta Air Lines, traditionally one of the country's most profitable carriers, expects to report $1 billion in pre-tax profit in the second quarter.
However, even Delta plans to "meaningfully reduce" its capacity growth projections. Delta holds a key competitive advantage: it owns a refinery. This allows the airline to bypass intermediaries for a portion of its fuel needs.
De Haan explained to Forbes that Delta "has cut out the middleman, essentially, and has made very lucrative arrangements to basically trade gasoline for jet fuel." This strategic move will benefit Delta. Airlines worldwide are adjusting their operations. Trimming routes represents one of the few practical levers carriers can pull to conserve fuel and manage costs.
Flight reductions have been particularly noticeable in Europe and Asia, where energy experts have cautioned about potential jet fuel shortages within weeks if the Iran conflict continues through the summer. After China and Thailand ceased exporting jet fuel to meet their own domestic needs, import-dependent markets like Vietnam, Myanmar, and Pakistan began experiencing supply shortfalls. Many Asian airlines are now flying with additional fuel onboard, a practice known as "tankering," as supplies have tightened, Reuters reported.
This adds weight and, paradoxically, increases fuel burn slightly, but it offers security against unpredictable supply. In Europe, German flagship carrier Lufthansa announced Tuesday it would cut 20,000 short-haul flights from its schedule through October. The European Commission responded by establishing a fuel observatory for its 27 member states.
This body aims to coordinate "national emergency measures" to monitor fuel availability and lessen "possible fuel shortages on the [European Union] aviation sector," illustrating the widespread concern. Against this backdrop of rising costs and capacity cuts, discussions about industry consolidation have surfaced. Earlier this month, United Airlines CEO Kirby reportedly floated the idea of a possible merger with American Airlines to government officials, including President Trump.
President Trump publicly opposed the idea Tuesday. He dislikes mergers. Robert Isom, American Airlines CEO, also dismissed the merger concept when speaking to investors on Thursday. "The idea of the two largest airlines in the world getting together, that is something we’ve viewed as being anti-competitive," Isom stated.
He added that "everybody that has weighed in suggests the same thing—bad for customers, bad for the industry, and ultimately … bad for American Airlines." Both sides claim victory in rejecting consolidation, but the underlying pressures for efficiency remain. Why It Matters This situation extends far beyond airline balance sheets. What this actually means for your family is not just higher ticket prices, but potentially fewer direct flights to certain destinations.
For communities that rely on air travel for tourism or business, reduced capacity could slow economic activity. The volatility of global energy markets, directly tied to geopolitical conflicts, shows how international policy decisions in Washington and Tehran have immediate, tangible impacts on Main Street businesses and working families trying to plan their next trip. It underscores this interconnectedness.
Key Takeaways - U.S. airlines, despite record Q1 revenue, are seeing profits eroded by a 69% jump in jet fuel prices since the Iran conflict began. - American Airlines and Delta Air Lines reported Q1 losses, with billions added to their annual and quarterly fuel bills respectively. - Six industry-wide fare hikes have occurred in the U.S. since the war started, directly impacting consumer travel costs. - Global fuel shortages are forcing airlines in Europe and Asia to cut routes and adopt practices like "tankering." - Talk of a merger between United and American Airlines was quickly dismissed by both President Trump and American's CEO, citing anti-competitive concerns. The immediate future for the airline industry hinges largely on two unpredictable factors: the trajectory of jet fuel prices and the geopolitical stability in the Middle East. Airlines will continue to monitor the Argus U.S.
Jet Fuel Index closely. Should fuel costs remain elevated, further capacity reductions and additional fare increases are likely across the summer travel season. Travelers should anticipate dynamic pricing.
Fewer available seats on popular routes are expected. Meanwhile, the Trump administration's stance on industry consolidation will be watched, particularly as vulnerable carriers like Spirit Airlines navigate their financial challenges. The ripple effects of this global energy crunch will continue to shape travel decisions for millions.
Key Takeaways
— - U.S. airlines, despite record Q1 revenue, are seeing profits eroded by a 69% jump in jet fuel prices since the Iran conflict began.
— - American Airlines and Delta Air Lines reported Q1 losses, with billions added to their annual and quarterly fuel bills respectively.
— - Six industry-wide fare hikes have occurred in the U.S. since the war started, directly impacting consumer travel costs.
— - Global fuel shortages are forcing airlines in Europe and Asia to cut routes and adopt practices like "tankering."
— - Talk of a merger between United and American Airlines was quickly dismissed by both President Trump and American's CEO, citing anti-competitive concerns.
Source: Forbes
