Airline Stocks Are Getting Absolutely Crushed Right Now and Delta Earnings on Tuesday Could Make Things Even Worse

If you've been following the market at all this week you already know things have been pretty chaotic, and honestly most of that chaos traces back to one thing: the Iran war and what it's doing to oil prices. But while everyone's been focused on crude oil headlines and Strait of Hormuz updates, one of the sectors getting hit the absolute hardest has kind of been flying under the radar. Airline stocks are getting destroyed right now across the board, the JETS ETF is down over 18% since the war started, and with Delta reporting Q1 earnings this Tuesday April 8th, the next few days could get even messier for the whole sector.

So let's actually break all of this down because there's a lot going on here and it's genuinely one of the more interesting setups in the market right now from a trading perspective.

What's Actually Happening to Airline Stocks

The core problem is jet fuel, and the numbers are pretty staggering when you actually look at them. Before the Iran war kicked off at the end of February, the U.S. Gulf Coast Kerosene-Type Jet Fuel Spot price was sitting at $2.428 per gallon. By March 20th it had reached $4.344 per gallon, which was its highest level since May 2022. That's a roughly 70% increase in under four weeks. And that was before oil pushed even higher this week after Trump's Wednesday night speech made clear the war isn't ending anytime soon.

Some reports are now saying jet fuel costs have nearly doubled compared to pre-war levels when you factor in the latest oil spike. Brent crude briefly hit $109 a barrel after Trump's address and WTI surged nearly 12% in a single day, which was the biggest one-day oil price jump in six years. Diesel crossed $5.51 a gallon nationally. The Shell CEO warned last week that fuel shortages are going to ripple around the world starting with jet fuel, moving to diesel, and eventually hitting gasoline. The airline sector is literally the first domino.

Here's why this matters so much specifically for airlines: fuel is already the single biggest operating expense for most carriers, typically making up 20% to 30% of total costs even in normal times. When jet fuel prices nearly double in a matter of weeks, that doesn't just eat into margins, it can flip a profitable quarter into a loss depending on how hedged a carrier is and how much they can pass costs through to passengers via higher ticket prices.

The Numbers Across the Sector

The damage across individual airline stocks has been pretty brutal and it's worth knowing where each carrier stands because they're not all in the same boat.

United Airlines fell 3.2% just this past Thursday after Trump's speech dashed hopes of a quick war resolution. CEO Scott Kirby had already announced earlier that UAL was cutting roughly 5% of its scheduled flights because of the fuel situation, and the stock dropped 4.46% on that news when it came out. Kirby also told employees that United is preparing internal models for oil hitting $175 a barrel and staying above $100 through the end of 2027. That's not a small hedge scenario. That's a company actively planning for an extended crisis. The good news is UAL isn't furloughing staff and is still taking delivery of its new aircraft orders including 20 Boeing 787s this year, which signals management believes this is a temporary disruption rather than a structural collapse of the business.

American Airlines tumbled 3.8% on Thursday and has been one of the worst performers in the sector throughout the war. Analysts have specifically flagged AAL as having higher leverage and greater fuel sensitivity compared to its peers, which puts it in a more vulnerable spot than Delta or United. JetBlue dropped 1.8% on Thursday and is down around 30% since the war started. Southwest fell 2.3% Thursday and is down approximately 25% over the same stretch. For context the broader S&P 500 actually posted its first weekly gain since the war began this past week, which means airline stocks are dramatically underperforming even in a week where most of the market managed to hold together.

Delta slipped 1.4% on Thursday and has been holding up relatively better than its peers, which is actually part of why Tuesday's earnings report is such an important event for the whole sector. Delta is seen as the most defensively positioned carrier right now because of its heavy focus on premium travelers, its American Express partnership that generates billions in loyalty revenue regardless of fuel costs, and its generally stronger balance sheet. If Delta's Q1 results come in bad despite being the strongest positioned airline, that tells the market something really concerning about what the rest of the sector looks like.

Why Delta on Tuesday Is the Big One to Watch

Delta reports Q1 2026 earnings on Tuesday April 8th and this is genuinely one of the most important airline earnings calls in years, not just because of the results themselves but because of what management says about the rest of the year.

Coming into 2026 Delta had guided for roughly 20% earnings growth for the full year, with full year EPS of $6.50 to $7.50 per share and free cash flow of $3 to $4 billion. The airline had record annual revenue of $58.3 billion in 2025, a stellar American Express partnership that grew 11% to $8.2 billion, and strong corporate and premium leisure demand that was carrying into the new year. CEO Ed Bastian had been very bullish, saying the year was off to a strong start. For Q1 specifically Delta had raised its own revenue forecast to high single digit year over year growth with revenues projected in the $15 to $15.3 billion range, which was actually an upgrade from its earlier guidance of 5% to 7% growth.

But all of that guidance was set before jet fuel nearly doubled. The Zacks consensus EPS estimate for Q1 has already been revised 5.6% downward over the past 60 days as analysts have been adjusting for the fuel shock. The full year EPS consensus now sits around $6.80 per share which is toward the lower end of Delta's own guidance range. Analysts are now specifically flagging fuel costs as likely to have dented Delta's Q1 bottom line performance even though top line revenue held up well because of strong bookings and higher ticket prices.

Here's what makes Tuesday's call genuinely high stakes: Delta has a history of beating earnings estimates. The company has beaten the Zacks consensus in each of the four prior quarters with an average beat of 7.9%. But this is the first earnings report from a major U.S. airline since the jet fuel crisis really kicked in, and whatever Delta says about its forward guidance for Q2 and full year 2026 is going to set the tone for how the market views the entire airline sector going forward.

If Bastian gets on the call and says something like "we're maintaining our full year EPS guidance of $6.50 to $7.50 and we have confidence in our fuel cost management and revenue trajectory," that's going to be a significant relief rally for airline stocks broadly. If he says "we're withdrawing full year guidance and visibility is too low to give meaningful forward guidance," that's going to send the sector sharply lower.

The middle scenario, which is probably most likely, is that Delta beats Q1 estimates because revenues were genuinely strong, but significantly cuts its full year guidance because of fuel costs and uncertainty around the war timeline. That kind of mixed result is going to be volatile in both directions and it's really going to come down to how bad the guidance cut actually is.

Why Most U.S. Airlines Are Especially Exposed

One thing that doesn't get talked about enough in the airline fuel cost conversation is hedging, or more accurately the almost total lack of it among U.S. carriers right now.

Fuel hedging is when airlines use financial instruments like options and futures contracts to lock in fuel prices in advance, protecting themselves from sudden spikes. Airlines used to hedge aggressively but most major U.S. carriers abandoned hedging strategies over the past decade because it was expensive and oil had been relatively stable. Southwest was famous for its hedging program and it saved the airline billions during the 2000s oil spikes, but even Southwest largely moved away from extensive hedging in recent years.

The result is that when jet fuel prices spike 70% in four weeks, U.S. airlines are absorbing almost the entire cost increase directly with very little cushion. European and some Asian carriers that maintained hedging programs are in a meaningfully better position right now. This is part of why you're seeing U.S. airline stocks get hit so hard while some international carriers are holding up relatively better.

The only real tools airlines have to fight back are cutting capacity to reduce fuel consumption and raising ticket prices to pass costs onto passengers. United is already cutting 5% of flights. Other carriers are expected to announce similar capacity reductions if oil stays elevated. Ticket prices have been rising but there's a limit to how much you can raise fares before demand starts to crack, especially for price-sensitive leisure travelers.

Who's Most Exposed and Who Has the Most Cushion

Analysts have been pretty clear about which carriers are in the most difficult spot. American Airlines, JetBlue, and Alaska Air Group are consistently cited as having higher leverage and greater fuel sensitivity compared to Delta and United. For AAL and JBLU specifically the combination of higher debt levels and thinner cushions on the balance sheet means a prolonged fuel cost shock could create real financial strain, not just a bad quarter.

TD Cowen actually cut price targets across the entire airline sector this week while maintaining Buy ratings on both UAL and LUV. The analyst specifically noted that "carriers with higher leverage levels and greater fuel sensitivity confront the most challenging near-term operating environment." For United, the price target went from $140 down to $120. For Southwest it went from $56 down to $46. These aren't panic sells, but they're meaningful acknowledgments that the fuel situation is going to hurt results for the foreseeable future.

The one silver lining TD Cowen mentioned is that further volatility in airline stocks could actually create attractive buying opportunities if you believe the war ends in a reasonable timeframe and fuel prices normalize. The firm considers this disruption cyclical rather than fundamental, meaning the underlying demand for air travel is still there and the long-term earnings power of these companies hasn't fundamentally changed. Once the Strait of Hormuz reopens and fuel prices come off, airline stocks could bounce back pretty sharply.

What Traders Should Be Watching

If you're thinking about airline stocks from a trading perspective right now here's what actually matters in the near term.

Tuesday's Delta earnings call is the single most important event for the sector over the next week. Watch closely for what Bastian says about fuel cost assumptions embedded in forward guidance, whether full year EPS guidance gets maintained or cut, and what the Q2 revenue outlook looks like. Any sign that Delta is managing the fuel shock better than expected is going to give the whole sector a lift.

Watch oil prices daily. The airline trade right now is almost entirely a macro trade tied to crude oil. If there's any credible sign that the Strait of Hormuz is moving toward reopening, oil comes off, jet fuel comes down, and airline stocks bounce. Trump's Wednesday speech killed that hope for at least a few more weeks, but the situation is changing constantly.

Keep an eye on capacity cut announcements. Every time an airline announces it's reducing flights, that's the market pricing in more duration to the fuel shock. If the capacity cuts start coming faster and bigger, that's a signal the airlines themselves don't think this resolves quickly.

And watch for any hedging announcements. If a major carrier announces it's locking in fuel prices through options or futures at current elevated levels, that's actually a bearish signal because it means management thinks prices are staying high for a long time. It's also a signal to short-term traders that the airline sees the pain extending further than markets currently expect.

The Bottom Line

Airline stocks are one of the clearest expressions of the Iran war's economic damage that you can trade in the equity market. The fuel cost spike is real, the capacity cuts are starting, the earnings estimates are coming down, and Tuesday's Delta report is going to set the tone for whether the market thinks this is a manageable bump or a prolonged crisis for the sector.

If you're bullish on a war resolution happening in the next few weeks like Trump has repeatedly suggested, beaten-down airline stocks at current levels could be a really interesting risk/reward setup. If you think oil stays elevated through the summer and the war drags on, the downside in airlines probably isn't done yet. Either way it's one of the most tradeable sector stories in the market right now and understanding the fundamentals behind it is what separates a smart position from just chasing a move.