The ongoing surge in oil prices since the start of the US-Iran war has actually sparked bullish projections for select airline stocks. Oil prices now hover above $100 per barrel, a steep increase from around $70 before the conflict began in late February. Simultaneously, jet fuel spot prices have risen from around $2.42 per gallon at the end of February to nearly $4.00 by mid-March.
Rising fuel costs can directly affect airline operating costs, which will impact the stock of these airlines. Some analysts suggest that the rising oil prices can actually benefit large airlines like Delta and JetBlue under the right circumstances, even though fuel is one of their biggest expenses. When oil becomes more expensive, weaker or smaller airlines often struggle to absorb the higher fuel costs, which can lead them to reduce routes, shrink operations, or exit the market entirely.
This reduction in competition gives stronger airlines more pricing power, allowing them to raise ticket prices or introduce fuel surcharges that often offset—and sometimes surpass—the additional cost of fuel. Many major airlines also use fuel‑hedging strategies, locking in lower fuel prices ahead of time. When oil prices spike, hedged airlines end up paying less for fuel than competitors, giving them a cost advantage. Delta has an additional edge because it owns its own refinery, helping it better manage fuel expenses when crude prices rise.
Airline stocks have tumbled since the Iran war started, but commentary from CEOs coming from an industry investor conference is proving to be a pivotal day for the sector. Soaring jet fuel prices have had investors fearing the worst when it comes to the impact on airlines’ earnings. Fortunately, on Tuesday, the biggest U.S. carriers provided updates at the JPMorgan Industrials Conference in Washington.
Delta Air Lines maintained its first-quarter earnings guidance and raised its revenue outlook, citing strong demand. Meanwhile, American Airlines increased its first-quarter revenue growth forecast to at least 10%, despite higher fuel costs. Furthermore, JetBlue Airways updated its guidance, projecting unit revenue to jump between 5% and 7% due to strong travel demand. Hence, the worries about the rising oil prices may actually benefit airline stocks, not harm them, unlocking a solid investment opportunity.