The latest surge in oil prices due to the ongoing conflict in the Middle East has made it nearly impossible for U.S. airlines to accurately forecast their 2026 financial results.
According to Reuters, jet fuel spot prices surged nearly 30% between July 2 and July 22 as the U.S.-Iran ceasefire began to fall apart. The result has been carriers scrambling to put together accurate earnings projections.
"I think margins are going to be effectively down for the industry," American Airlines' Chief Financial Officer Devon May told Reuters. "If we had guided on the same day as Delta, we'd have been guiding up for the year."
Delta Air Lines was the first major U.S. airline to report second quarter 2026 financial results on July 10, with CEO Ed Bastian saying "Delta's brand and industry position are stronger than ever," at the time.
"At this time last week, I was planning to tell you that we had a good line of sight to growing earnings year-over-year," United Airlines CEO Scott Kirby said on the airline's earnings call on July 16. "But fuel has gone up a lot in the last week."
"You've got to choose a fuel price. You can guess at whatever you think fuel is, but the reality is none of us know," Ryan St. John, Alaska's vice president of finance, planning and investor relations, told Reuters.
Airlines have been successful in overcoming rising fuel costs by cutting capacity and raising fares amid strong travel demand since the war began at the end of February, but fare increases aimed at offsetting climbing operating costs take weeks or months to come in since they must apply to tickets that haven't already been sold.
According to Reuters, American's elevated fares offset nearly half of a $2.2 billion year-over-year increase in second-quarter fuel expense. Meanwhile, Delta recovered about 60% of its fuel increase, while United recovered about 50%.
Airlines are seeing that even a slight shift in the fuel market can have a mighty impact on their bottom lines. Every one-cent increase in American's average fuel price adds about $46 million to its annual expense, according to May. That means that a 10-cent increase would cost the airline approximately $460 million.
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