DAL, UAL, AAL, LUV Stocks Slip Overnight: IATA Halves 2026 Airline Profit Outlook, Sounds Alarm On Fuel Costs

• IATA now expects airlines to earn $23 billion in 2026, down from its earlier $41 billion forecast and below 2025's estimated $45 billion. 
• Rising fuel prices remain the biggest challenge, with airline fuel costs expected to jump to $350 billion in 2026. 
• American and United cut forecasts, while Southwest and Delta left guidance unchanged.

Shares of major U.S. airlines came under pressure overnight, ahead of Monday, after a stark warning from the International Air Transport Association (IATA) raised concerns about profitability across the sector. 

United Airlines Holdings (UAL), Delta Air Lines (DAL), American Airlines Group (AAL) and Southwest Airlines (LUV) stocks slipped between 0.5% and nearly 2%. 

IATA Cuts Profit Outlook As Fuel Prices Bite 

In a report on Sunday, (IATA) reduced its financial expectations for the global airline sector, warning that an increase in fuel expenses and disruptions tied to the Middle East conflict are expected to weaken industry profitability in 2026. 

While passenger demand remains strong and revenues are expected to rise, airlines face rising cost pressures that threaten to eat into earnings across most regions. IATA now expects airlines to rake in $23 billion in profits this year, sharply down from its earlier forecast of $41 billion and well below the estimated $45 billion profit in 2025.

“War-related disruptions in the Middle East and rising fuel costs have shifted the outlook for airlines to the worse. Globally, airlines are expected to see profitability halve compared to 2025.”

-Willie Walsh, IATA’s Director General

Airlines are expected to generate a net margin of just 2.0% this year, less than half the 4.2% projected for 2025. Airline revenue is expected to grow to about $1.17 trillion in 2026, helped by higher ticket prices, extra service fees, and cargo business. 

Fuel Shock Drives Costs Higher

Higher fuel prices remain the biggest challenge. IATA expects airline fuel costs to jump to about $350 billion in 2026 from $252 billion a year earlier. Fuel could make up nearly one-third of airline expenses, putting pressure on profits even as carriers raise ticket prices.

“Some of the additional cost is being recuperated by adjusting prices and improving efficiency, but it will not be sufficient to maintain profitability at the previous year’s level, said Walsh.

Airlines based in the Middle East are expected to be hit hardest, with operational disruptions and weaker demand potentially pushing the region into losses. North American airlines, while insulated from direct operational impacts, remain exposed to higher fuel costs and elevated labor expenses.

At the time of writing, Brent crude futures expiring in August were up 4%, trading at around $97.60 a barrel, while WTI crude futures expiring in July climbed 4.5% higher, trading around $94.64 a barrel. 

Airlines Slash Outlooks Amid Fuel-Cost Surge 

Large players in the U.S.  airlines industry are reassessing their financial expectations for 2026 as higher fuel prices tied to the conflict involving Iran increase operating costs across the industry. 

Several major carriers have either lowered earnings projections, withdrawn guidance or declined to update forecasts. American Airlines reduced its full-year 2026 earnings forecast in April and acknowledged it could finish 2026 with a loss.

United Airlines also slashed its full-year profit forecast, citing the same fuel-cost pressures. The carrier now expects adjusted earnings between $7 and $11 per share, down from its previous projection of $12 to $14 per share. 

Southwest Airlines and Delta Air Lines have chosen not to revise their 2026 earnings targets, although executives acknowledged that achieving the goals will depend on fuel prices and revenue trends. 

So far this year, only DAL has gained 15%, while LUV edged up 0.9%. AAL and UAL stocks have tumbled 11% and 5%, respectively. 

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