As of writing this, jet fuel is trending at nearly $5 a gallon — a record high for the year. And now, these soaring prices are catching up with every single U.S. airline.
We have now seen third-quarter earnings results from most major U.S. airlines. Every single one has slashed its profit forecast. Only Delta, United, and Southwest are on track to make a profit, even those profits will be smaller than initially projected. American and Alaska, on the other hand, will see deeper losses.
Most U.S. airlines are expecting to spend anywhere between $4.25 and $4.85 a gallon on jet fuel expenses — more than double from the year before.
The soaring costs have not appeared to worry most airlines. Industry executives have said they see more room to raise fares and are now more focused on yields rather than load factors. That’s why we’ve heard executives at these airlines describe demand as “healthy” and “robust,” even though TSA data shows that fewer people are traveling this year compared to last year. Airlines are still reporting record revenues.
But it’s unclear how low-cost and ultra-low-cost airlines will cope with these high fuel prices. JetBlue is set to report third-quarter earnings on October 27 and its $2 billion bonds backed by the carrier’s loyalty program due in 2031 have already entered distressed territory, trading at 40 cents on the dollar. CEO Joanna Geraghty ruled out the possibility of Chapter 11 bankruptcy earlier this year. We’ll hear how she sees things now when JetBlue reports results on Tuesday.
Skift Aviation Forum
On November 12, the people setting aviation’s agenda for the year ahead will be in one room at the TWA Hotel, JFK, and the conversations that move the industry happen in the seats, not the recap.
The CEOs of International Airlines Group, Breeze Airways, and Embraer join American Airlines, Air Canada, Boeing, and Airbus to work through profitability, capacity, fleet strategy, and what loyalty points are really worth. A full day of the decisions shaping your next year, from the leaders making them.
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Kirby says only United and Delta are left as “brand loyal” U.S. airlines, and that the rest are on borrowed time. On this week’s Airline Weekly, Gordon and Jay look at whether a 7% margin backs up that confidence, plus Alaska’s Q3 miss and the swipe-fee risk to loyalty revenue.
Skift Travel 200
How are airlines performing around the world? The Skift Travel 200 pulls the data you need to know to understand the market. Paid subscribers get full access here.
