Fuel Costs Are Eating Into Airline Profits — Which Carriers Can Survive the Squeeze?

TLDR

• The IATA slashed its global airline net profit forecast to $23 billion, down from $41 billion
• Jet fuel prices are expected to average $152 per barrel in 2026, up nearly 70% year-over-year
• Delta, United, and American Airlines have shown resilience, up 56%, 26%, and 14% over the past year
• North American airlines are projected to earn $9.4 billion of the total $23 billion global profit
• Delta’s AmEx partnership generated $8.2 billion in 2025; United’s global network serves 370+ destinations

Airline stocks fell on Monday after the International Air Transport Association issued a sweeping profit warning for the global airline industry. The sell-off was initially sharper but eased after Iran announced it had ended its strikes toward Israel, which had pushed oil prices higher.

Delta Air Lines ended early trading down 0.7%, while United Airlines dropped 1.4% after falling nearly 3% before the open. Southwest Airlines, Norwegian Cruise Line, Royal Caribbean, and Carnival all fell more than 1%.

Delta Air Lines, Inc., DAL

IATA Cuts Global Profit Forecast

The IATA cut its 2026 net profit forecast for global airlines to $23 billion, down from $41 billion. That is also roughly half the $45 billion recorded last year.

Fuel costs are driving the downgrade. The IATA expects total fuel costs to rise by around $100 billion to $350 billion this year. Jet fuel is forecast to average $152 per barrel, nearly 70% higher than the prior year.

North American carriers are expected to account for $9.4 billion of the $23 billion total, down from $12.4 billion last year.

The IATA said U.S. carriers have strong incentives to raise ticket prices since most have moved away from fuel hedging. It expects network carriers to hold up better than low-cost operators in North America.

Delta vs. United: Two Different Strategies

Despite the sector-wide pressure, Delta and United have held up well over the past year. Delta is up 56%, United is up 26%, and American Airlines is up 14%. Southwest has gained 24% over the same period.

Delta reported revenue of $63.4 billion in fiscal 2025, with a net income of around $5 billion and a net margin of 7.9%. Its partnership with American Express brought in $8.2 billion last year, giving it a buffer against fuel cost swings.

United reported revenue of $59.1 billion in fiscal 2025, with net income of $3.4 billion and a net margin of 5.7%. It operates more than 370 destinations across six continents and has focused on international expansion.

Delta carries a debt-to-equity ratio of around 1.0x and generated $3.8 billion in free cash flow. United’s debt-to-equity ratio is higher at 2.0x, with free cash flow of $2.6 billion.

Both airlines face risks. Delta has flagged technology vulnerabilities after a 2024 IT outage linked to CrowdStrike. United faces operational pressure from air traffic control staffing shortages at key hubs like Newark and Chicago.

The IATA warning is most likely to affect overseas carriers and low-cost operators. America’s largest network airlines are better positioned to pass rising fuel costs on to passengers.

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