Airline profits plummet as US fuel costs nearly double

IATA forecasts $350bn airline fuel bill for 2026, with profits dipping to their weakest margin since the COVID-19 pandemic.Stocks of major airlines including Southwest, United and Delta are down on Monday [File: Julio Cortez/AP]Published On 8 Jun 2026Jet fuel prices in the United States are rising sharply ahead of the peak summer travel season as escalating tensions between the US and Iran raise concerns about disruptions in the Strait of Hormuz, a critical passage for global energy shipments.fuel costs surged by 78 percent to nearly $6.5bn in April, following a 26 percent jump in March, according to US Department of Transportation data released on Monday.Recommended Stories list of 4 itemslist 1 of 4How the US naval blockade has bled Iran of nearly $6bn in oil revenueslist 2 of 4Trump admin’s cancellation of wind energy projects causes business turmoillist 3 of 4Anthropic urges AI labs to pause, warns humans risk losing controllist 4 of 4100 days into Iran war, Americans face higher pricesend of listThe cost per gallon (3.78 litres) increased by $1.81 from this time last year to $4.11.The International Air Transport Association (IATA), which represents more than 370 airlines accounting for about 85 percent of global air traffic, said in its annual report published on Sunday that net profit across the sector would come in at a combined $23bn for 2026, well below a previous projection of about $41bn and down from $45bn in 2025.IATA said the profit margin will be “the weakest outcome since the COVID years”.Airfares in the US have jumped 5.5 percent since the war began — 2.7 percent in March and another 2.8 percent in April — according to the US Labor Department’s Bureau of Labor Statistics, amid strains on the jet fuel supply.“Jet fuel availability is threatened, and the price has roughly doubled since late February,” IATA said in its report.Despite the fuel price increase, domestic flights are still being booked for the busy US summer travel season. The American Automobile Association forecast a jump in domestic travel during the Memorial Day holiday weekend, May 23-25, considered the unofficial start of summer. The group projected that 3.6 million travellers would take domestic flights.Yet, airlines are facing increased pressure that, in some cases, is putting them out of business. Budget carrier Spirit Airlines ceased operations in early May after three decades in service. In court filings, the airline attributed its collapse to surging fuel prices.In April, United Airlines CEO Scott Kirby said the Chicago-based airline would need to raise prices by up to 20 percent amid the surging costs.Last week, American Airlines announced it would temporarily suspend some flights amid soaring prices. Routes impacted include several transcontinental services, including Charlotte to Sacramento and Los Angeles to Pittsburgh.The US-Israeli strikes on Iran in late February and Iran’s subsequent retaliation have also forced major global airlines to reroute flights around closed and restricted airspace, increasing fuel burn and straining already tight capacity.Global carriers, especially European-based airlines, were already facing pressure on Asia-bound routes because of the closure of Russian airspace amid the ongoing war in Ukraine.IATA expects airlines’ fuel bill to surge to about $350bn this year from roughly $252bn in 2025, with fuel accounting for nearly a third of operating costs.MarketsOn Wall Street, most major US airlines were trending downward in midday trading. Delta Air Lines was down 0.8 percent, United 0.35 percent, JetBlue more than 1 percent, and Southwest 0.9 percent. American Airlines, however, was up 1.4 percent since the market opened.Meanwhile, oil prices shot up during Asia trading hours on Monday by more than 5 percent while crude prices jumped by almost 2 percent after renewed Israeli strikes on Iran and attacks on Lebanon had reduced hopes of an imminent end to the wider war.Those pared by during the US morning after Iran’s armed forces announced the end of military operations against Israel but warned of a response if it resumed strikes on either Lebanon or its territory.Gold, which is usually considered a safe investment during times of economic uncertainty, rebounded from session lows amid prospects of a potential ceasefire.Spot gold was steady at $4,331.69 per ounce after hitting its lowest level since March 23 at $4,268.39.US gold futures for August delivery are down 0.2 percent at $4,356.50.While also driven by a chipmaker selloff, major US indices were trending upwards at midmorning on Monday. The Nasdaq was up by 1.1 percent and the S&P 500 by 0.6 percent. The Dow Jones Industrial Average, however, was down from the market open by 0.1 percent.