The soaring price of jet fuel will cost American Airlines an additional $4bn this year, the carrier has announced, wiping out its forecast profits. The airline, the world's largest by passengers flown, stated that the fuel crisis stemming from the US-Israel war on Iran could push it into losses during 2026. Prior to the conflict's onset at the end of February, the company had projected profits approaching $1.8bn.
Fuel Price Surge and Its Impact
The price of jet fuel has more than doubled since the conflict began. While many European airlines have hedged their fuel, locking in a purchase price for months or years ahead, American carriers have been exposed to the price rises. American Airlines will aim to offset these costs with higher fares. Its revised guidance "assumes continued revenue improvement in the domestic entity, growth in corporate customer volumes and the ability to partially recapture elevated fuel prices."
Despite the challenges, American Airlines exceeded forecasts and reported record revenues during much of the first quarter of 2026, totalling $13.9bn. Jet fuel prices in the US are slightly lower than in Europe, at approximately $4 per gallon.
Global Airline Industry Under Pressure
Airlines globally are grappling with rising fuel prices. Some carriers, such as Virgin Atlantic, have already introduced fuel supplements to their fares, starting at £50 extra in economy for long-haul flights. However, faltering consumer confidence amid the broader expected oil shock may hinder airlines' ability to pass on widespread higher fares.
Beyond pricing, the guaranteed availability of fuel has become an increasing concern. Airlines in the UK have indicated they have six weeks' visibility of supplies, which is the usual horizon, but the closure of the Strait of Hormuz and the Iranian and US blockades have placed the longer-term flow of fuel in jeopardy. It emerged this week that UK airlines have been lobbying the government for contingency measures, despite publicly maintaining confidence in supplies. Their demands include lowering taxes and easing regulations on night flights, airport slot retention, and passenger compensation should shortages begin to affect operations.
The head of the International Energy Agency, Fatih Birol, repeated warnings on Thursday that Europe would face a summer of disrupted flights if it could not secure sufficient new supplies from the US and Nigeria. Lufthansa this week cancelled 20,000 short-haul flights due to fuel prices. Birol stated that the disruption had "just started," adding, "In August, jet fuel demand is 40% higher than in March."
