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Jet fuel price spike disrupts U.S. airlines' earnings forecasts

Jet fuel costs rose about 20% in the two weeks surrounding airlines' April-June reporting as Middle East tensions escalated.

Reported · Written up by our desk · Energy

A fresh jump in jet fuel prices in July has thrown U.S. airline profit guidance into disarray, according to OilPrice. Management teams were forced to adjust earnings estimates for the year just days ahead of reporting second-quarter results.

OilPrice said the re-escalation in the Middle East earlier this month drove a roughly 20% spike in jet fuel prices during the two weeks when carriers reported April-June earnings and tried to set expectations for the third quarter and the rest of the year.

The article links the uncertainty to extreme volatility in crude oil and jet fuel prices, which makes projections dependent on where jet fuel trades on any given day. It also notes that for months the outlook has hinged on which Middle East oil chokepoint is closed to traffic and whether the U.S. Administration is attempting to talk down oil prices.

OilPrice added that the Middle East crisis has rattled the earnings outlook across major U.S. airlines, with fuel costs described as their second-highest expense after labor costs. It cited second-quarter results from United Airlines, American Airlines, and Southwest Airlines as showing spiking jet fuel costs and management uncertainty around full-year earnings impacts amid continued volatility.

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