Key Takeaways
- Aviation sector equities experienced sharp declines following President Trump’s indication that the Iran conflict may continue longer than investors anticipated.
- The cost of jet fuel has skyrocketed approximately 70% since the commencement of the U.S. and Israel-led military operations against Iran.
- Both United Airlines (UAL) and Southwest (LUV) ranked among the S&P 500’s biggest losers for the session.
- Investment firm TD Cowen reduced price projections for multiple airline stocks, pointing to rising fuel expenses and weakening consumer travel patterns.
- UAL’s price target was adjusted downward to $120 (previously $140) and LUV to $46 (from $56) by TD Cowen, though both retained Buy recommendations.
Major airline carriers saw their share prices decline Thursday following President Trump’s recent statements regarding the Iran military conflict, which dampened market expectations for a near-term resolution. Investors had been anticipating a rapid conclusion to hostilities — and the corresponding drop in aviation fuel costs. Those hopes quickly dissipated.
Shares of United Airlines (UAL) declined 3.2% while Southwest Airlines (LUV) retreated 2.3%, positioning both carriers among the session’s poorest performers within the S&P 500, which registered a modest 0.2% decrease overall.
United Airlines Holdings, Inc., UAL
Delta Air Lines (DAL) slipped 1.4%, JetBlue (JBLU) dropped 1.8%, and American Airlines tumbled 3.8%. The U.S. Global JETS ETF experienced a 2% decline.
During Wednesday’s address, Trump declared the Iran war is “nearing completion” while emphasizing that “we must honor the dead by completing the mission.” Financial markets interpreted the subtext: the military engagement will likely extend considerably longer.
Aviation fuel costs have climbed roughly 70% since military operations involving the U.S. and Israel against Iran commenced. The U.S. Gulf Coast Kerosene-Type Jet Fuel Spot price reached $4.344 per gallon on March 20 — marking the highest level observed since May 2022. Prior to the conflict’s start on Feb. 27, the price stood at $2.428 per gallon.
Such dramatic price increases create severe profitability challenges for airline operators.
Investment Firm Reduces Airline Sector Price Targets
Tom Fitzgerald, an analyst at TD Cowen, lowered price objectives for numerous carriers on Thursday. He cited expectations for extended elevated energy costs combined with deteriorating credit card expenditure data as justification for moderating forecasts.
“We lower our estimates for the big 6 U.S. airlines with fuel looking likely to remain elevated vs. antebellum prices for the remainder of 2026,” Fitzgerald explained in his research note.
TD Cowen adjusted its United Airlines price objective to $120 from $140, while preserving its Buy rating. The firm identifies Delta as the most defensively positioned carrier currently, yet continues to regard United as offering the strongest long-term investment opportunity.
Regarding Southwest, TD Cowen revised its target downward to $46 from $56, also retaining a Buy recommendation. The firm acknowledged its Southwest earnings projections now fall beneath wider market consensus expectations ahead of Q1 financial reports.
Fitzgerald highlighted that carriers characterized by “higher leverage levels and/or greater fuel sensitivity” confront the most challenging immediate-term operating environment. He specifically identified American Airlines, JetBlue, and Alaska Air Group as particularly vulnerable.
Southwest Faces Headwinds as Analyst Projections Trail Market Expectations
Southwest approaches the upcoming earnings period from a challenging position. TD Cowen’s below-consensus forecasts, coupled with indicators of softening demand and escalating operational costs, establish reduced expectations — though this simultaneously increases execution risk.
Southwest shares are down 7.1% year-to-date, with average daily trading volume exceeding 10 million shares. The company’s market capitalization currently stands at $18.78 billion.
Notwithstanding the reduced price targets, TD Cowen maintained Buy ratings on both UAL and LUV, indicating the current weakness is perceived as temporary rather than fundamental. Fitzgerald observed that “further volatility” could generate “attractive buying opportunities” for United shares.
The U.S. Gulf Coast jet fuel spot price continues hovering near multi-year peaks as the sector approaches Q1 earnings season.
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