Airlines Face Jet Fuel Shock As Iran War Rages | Insight with Haslinda Amin 3/25/2026
Speakers
Summary
- The Iran war has caused a severe jet fuel shock, with Brent crude recently above $100/barrel, creating an existential crisis for airlines where fuel is ~30% of costs.
- Major airline CEOs hold divergent views: United's Scott Kirby calls it a "crisis," plans for "higher for longer" oil (~$175), and is cutting marginal capacity (5%), while Delta's Jeff Moomaw sees robust Asia-Pacific demand and no immediate network cuts.
- Philippine President Marcos declared a national energy emergency, citing a "distinct possibility" of grounding planes due to jet fuel shortages and supply chain dislocations.
- Airlines are raising fares (Philippine Airlines up ~30%, United mulling 20% hikes) but face varying consumer tolerance, with low-cost carriers and price-sensitive markets like the Philippines most vulnerable.
- Despite the shock, passenger demand is described as the "strongest ever" (Kirby) and "robust" (Moomaw), particularly for premium leisure and corporate travel, providing a near-term revenue buffer.
- Geopolitical focus is on reopening the Strait of Hormuz; the U.S. is reportedly seeking a one-month ceasefire via a 50-point plan, with Pakistan offering to mediate talks.
- The financial strength of U.S. carriers like United (triple pre-COVID cash, best credit rating in 30 years) is highlighted as a key differentiator to weather the crisis and continue investing.
- New Zealand's government is taking a targeted fiscal approach to the fuel crisis, refusing broad tax cuts due to a lack of fiscal headroom, instead offering temporary support to low/middle-income families.
- Fortescue's Andrew Forrest warns Iran is a "huge country" with decades of preparation for war, implying escalation risks are high and the conflict may not end quickly.
- The Philippine Peso is under severe pressure; President Marcos suggests defending it via FX intervention is "futile" as the dollar's strength is driven by its status as a major oil producer.
Trade Ideas
Multiple speakers highlight extreme vulnerability: fuel is 30%+ of costs (Nuttall), oil prices have doubled, President Marcos warns of a "distinct possibility" of grounding planes, and airlines are cutting capacity and raising fares significantly. The industry operates on low single-digit margins and is facing an exogenous cost shock of historic proportions with limited immediate ability to fully pass costs to all consumers, especially in price-sensitive markets. The sector faces severe margin compression, existential risk for weaker players, and potential government-imposed fuel rationing, making it broadly unattractive. A rapid diplomatic resolution to the Iran war and reopening of the Strait of Hormuz, causing a swift normalization of fuel prices and supply.
Forrest warns, "If you go and attack a country which has had decades of preparation for being attacked, it's not going to be easy... My fear is that its response might be surgical." He implies the conflict has high escalation potential. Iran is a major energy producer and sits on the critical Strait of Hormuz. A protracted or escalating conflict directly threatens global supply of oil, gas, and related minerals, sustaining price volatility and supply fears. The sector is in a highly unstable geopolitical environment where prices and supply chain security can swing dramatically based on military and diplomatic developments. A swift and successful diplomatic ceasefire that reopens the Strait of Hormuz.
Kirby states United is "well-positioned to weather this crisis," carrying triple pre-COVID cash, having the best credit rating in over 30 years, and being prepared to never furlough again. He plans to continue investing in aircraft and the future through the crisis. This superior financial fortitude, built post-COVID, provides the resources to make tactical short-term adjustments (like cutting 5% of marginal capacity) while looking through to the recovery on the other side. The company's strategic preparedness and strong balance sheet position it to endure the oil price shock better than competitors and emerge stronger. A severe, prolonged global demand collapse beyond the current strong booking environment.
Moomaw states Delta sees "robust demand" in Asia-Pacific, with no network cuts anticipated. He highlights strong growth in premium demand, a diversified product suite, and a strategic JV with Korean Air providing resilience and connectivity. Delta's focus on premium cabins, efficient fleet (A350s), and strong partnership network positions it to capture high-value traffic and reroute passengers affected by Middle East disruptions, mitigating the fuel cost impact. The company's specific strengths in the resilient Asia-Pacific premium travel segment and operational flexibility provide a relative advantage in the current environment. A severe and prolonged jet fuel supply shortage that disrupts all long-haul operations irrespective of demand.
Up Next
This Bloomberg Markets video, published March 25, 2026, features Ferdinand Marcos Jr., Andrew Forrest, Scott Kirby, Jeff Moomaw discussing AIRLINES, XLE, UAL, DAL. 4 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Ferdinand Marcos Jr., Andrew Forrest, Scott Kirby, Jeff Moomaw · Tickers: AIRLINES, XLE, UAL, DAL