Higher Jet Fuel Prices Pressure U.S. Airlines

Major US airlines are grappling with rising fuel costs—a byproduct of the Iran war—while travel disruptions could emerge just in time for spring break because of a government funding stalemate. , Janet H. Cho reported for Barron’s Daily.

United Airlines CEO Scott Kirby told CNBC that rising fuel prices will significantly affect the company’s first-quarter earnings. (Photo: United Facebook)

Spot jet fuel prices have surged 60 cents per gallon since the end of February. Jet fuel reached $4.19 a gallon in Los Angeles and $3.92 a gallon in New York Harbor, according to energy data provider OPIS.

TD Cowen analyst Tom Fitzgerald has cut price targets for airline stocks, citing squeezed profit margins.

He said airlines may be able to pass some of the higher fuel costs on to passengers, but meaningful margin expansion will be difficult unless energy prices drop quickly.

United Airlines CEO Scott Kirby told CNBC that rising fuel prices will significantly affect the company’s first-quarter earnings, adding that higher fuel costs will likely be reflected in airline ticket prices.

Travelers are also facing long lines at some US airports, including Houston and Atlanta, where the Transportation Security Administration (TSA) is dealing with staffing shortages.

TSA employees have continued working without pay due to the federal government shutdown.