Airlines Rally on Iran Ceasefire, But Fuel Pain Persists
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- United Airlines, Delta Air Lines, and Southwest Airlines all jumped 10%+ in premarket trading in New York — United up 11.5%, Delta up 11%, Southwest up 10% — following the overnight US-Iran ceasefire that ended six weeks of aviation industry turbulence.
- Willie Walsh, IATA's director general, said even a two-week truce is 'positive because we will see some flow of oil return,' but warned jet fuel prices 'will remain elevated' and higher fares are 'inevitable' even if jet tracks crude's 16% drop.
- Walsh cautioned that jet fuel supply shortage risks remain elevated after the conflict, with Asia seen as the most exposed region, followed by Africa and Europe.
- Delta Air Lines warned it expects to incur more than $2 billion in fuel costs through June, though it has not yet revised its full-year profit forecast because the outlook remains 'too murky.'
- Malaysia Airlines CEO Nasaruddin Bakar warned that 'even if the war stops, it's going to take many, many more months for the price to stabilize,' pointing to structural damage beyond the ceasefire itself.
- Thai Airways CEO Chai Eamsiri said the real problem is destroyed infrastructure — refineries, facilities, and supply networks — that 'will take some time to bring back,' independent of any political truce.
- Melius analyst Conor Cunningham told clients the Iran conflict 'flipped the airline industry on its head,' with fuel costs more than doubling even as demand improved.
Why it matters: Walsh's framing — higher ticket prices as 'inevitable' despite a ceasefire and crude already down 16% — signals that carriers like Delta carrying $2B+ in fuel costs through June will keep passing costs to travelers. The infrastructure damage cited by Thai and Malaysian CEOs means fuel supply normalization is months out, so the relief rally in airline stocks prices a geopolitical thaw that physical fuel markets haven't caught up to yet.
