Can the surge in oil prices still be considered a temporary shock? With fuel typically representing 25% to 30% of an airline's costs, carriers are starting to feel the pinch - despite hedging strategies that offer partial protection.

"This situation is putting pressure on airline margins, limiting their pricing power, and increasing the downside risks to medium-term traffic and capacity forecasts," analyzed Saïma Hussain, aviation specialist at AlphaValue, this morning.

Rising Oil Prices Passed On to Fares

In concrete terms, jet fuel prices have soared by about 150% in just three weeks, driven by falling crude exports from the Middle East and refining capacity constraints. "Futures contracts anticipate prices remaining significantly higher in 2026, with a 100% increase in Q2 and up to 63% in the second half compared to 2025," UBS points out.

The market is making no mistake, and the entire sector is nose-diving (-5.9% for Finnair, -5% for Rolls-Royce and Wizz Air, -4% for easyJet and Lufthansa...).

Also, with a 5% drop, Air France-KLM is no exception, having even fallen by 30% over one month. Contacted this morning by MarketScreener, the French carrier noted that it has fuel hedging of around 70% for the current and next quarters and said that it is monitoring the situation in the Middle East with the utmost attention.

The airline has already announced fare increases: for example, another €50 will be added to economy class round-trips on long-haul flights issued since March 11, and €70 on flights to the US, Canada, and Mexico for tickets issued as of March 19, 2026.
Will this impact demand? "It is currently too early to measure," the company warned.

An Unfavorable Risk/Reward Profile

At AlphaValue, analysts believe the sector's risk/reward profile remains unfavorable, with upside potential limited to a technical rebound and downside risk in the event of high oil prices or increased tensions. Additional pressure could come from a slowdown in production rates and after-sales service, particularly penalizing Safran and MTU.

"Risks now pertain to potential jet fuel shortages and capacity rationalization, particularly among the least profitable airlines. Conversely, players with high EBIT (operating profit) margins appear better positioned to maintain their offering," UBS asserts.

In the United States, airlines are also closely monitoring the situation. Late last week, Scott Kirby, CEO of United Airlines, pointed out that fuel costs had more than doubled in a few weeks, which could lead to an annual additional cost of $11bn.

Airlines Adapt

In response to this situation, United indicated it is adjusting its short-term offering, notably by suspending certain routes to Tel Aviv and Dubai and reducing capacity during off-peak periods.

Despite this pressure, the airline insists on the strength of demand and is maintaining its long-term investment strategy, believing it is better positioned than its competitors to absorb this shock.

At Jefferies, analysts even believe that Q1 results for the US aviation sector should remain "broadly in line with initial forecasts," as revenue growth offsets rising fuel prices.

Thus, Delta Air Lines anticipates revenue growth exceeding 10%, while American Airlines expects a limited loss at the lower end of its guidance range.

In this context, some airlines are adjusting their strategy: Frontier has deferred the delivery of 69 Airbus A320neo aircraft to 2031-2033 and terminated certain lease agreements, reflecting prudent capacity management.

Meanwhile, "Qatar Airways has grounded 20 of its long-haul aircraft in Spain, away from risks. This measure clearly illustrates the need to limit supply in times of war and the risks weighing on the maintenance sector, whether for engine manufacturers (Rolls-Royce, MTU, Safran) or companies like Lufthansa Technik or Air France Maintenance," AlphaValue concludes.