Airline stocks sold off on Monday as grounded flights and a rise in crude oil prices fueled concerns about shrinking profits due to rising jet fuel costs.
Shares of Delta Air Lines (DAL) fell 5% before paring losses, while American Airlines (AAL) fell as much as 6% and United Airlines (UAL) fell as much as 7%.
Investors priced in the impact that oil at $100 a barrel will have on jet fuel costs, which account for between a fifth and a quarter of airlines’ total costs. On Monday, oil prices surpassed $110 a barrel for the first time since 2022 as traffic in the critical Strait of Hormuz remained paralyzed as a result of the Iran war.
The cost of jet fuel has risen as high as $1.75 per gallon in recent weeks, meaning major U.S. airlines could each face around $1.5 billion or more in quarterly fuel costs, according to data from GasBuddy.
“Across the three largest airlines, that could translate into almost $5 billion in additional spending,” Patrick De Haan, head of petroleum analysis at GasBuddy, said Monday.
“Airfares are likely to rise in the coming months, even if oil prices begin to stabilize soon,” he said.
On Friday, United Airlines CEO Scott Kirby said the impact of higher fuel costs on airfares would “likely begin quickly.”
U.S. airlines once hedged against rising fuel costs by using derivatives, but have largely abandoned the practice because it can be costly when oil prices fall. Southwest (LUV), one of the most active fuel hedging companies in the industry, ended the strategy in 2025, for example.
In addition, the Middle East conflict has already grounded more than 20,000 flights and left thousands of passengers stranded.
European airlines Lufthansa (LHA.DE) fell about 5% on Monday, while British Airways and Aer Lingus parent company International Consolidated Airlines Group (IAG.L) fell 3%. Air France-KLM (AF.PA) also fell 3%.
U.S. airlines were already facing headwinds this year, when major storms canceled thousands of flights across the country.
Delta, American and United are down 20% to 30% so far this year. Domestic airlines SouthWest (LUV), JetBlue (JBLU) and Alaska (ALK) are also down a lot by 30% in a one-month period.
Inés Ferré is a senior business reporter at Yahoo Finance. Follow her on X in @ines_ferre.
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