JPMorgan has sharply reduced its 2026 earnings forecasts for North American airlines, after revising its fuel assumptions higher and identifying signs of weakening demand, according to a research note by analysts Jamie Baker and James Kirby.
The bank said it has updated its models to reflect jet fuel prices of $4.90 per gallon in the second quarter and $4.80 for the second half of the year, a shift it described as having a “materially negative” impact on earnings. As of April 7 jet fuel prices were hovering around $4.70.
The revised assumptions underpin a base case in which higher fuel costs cannot be offset by ticket price increases - a view reflected by many other analysts.
JPMorgan said its modelling now suggests that “any hopes for 2026 profitability have largely been dashed”, although it sees some carriers - including Delta Air Lines, Southwest Airlines and Air Canada - potentially reaching breakeven, with United Airlines “not far behind”.
The downgrade in earnings expectations also reflects changes in demand indicators. The bank pointed to data on daily air travel spending from its internal payments business, which showed a deceleration through March 27. While JPMorgan cautioned that the data is not strongly correlated with airline revenue and does not fully capture corporate travel demand, it said it provides a directional signal of consumer willingness to book flights.
As a result, JPMorgan has made only modest adjustments to its 2026 revenue forecasts. Analysts had previously expected to raise revenue estimates by 3% to 5%, but instead kept assumptions largely unchanged, still reflecting a “strong year for demand” but weaker than earlier expectations.
On capacity, the bank said it has not made significant revisions to airline schedules in its models, although it expects reductions to follow. Domestic capacity growth in the second quarter has already tightened to around 2%, down from closer to 3% previously, and further cuts are anticipated after the summer peak.
The research note highlights that airline equities are increasingly tracking movements in oil prices, with fuel costs now the dominant driver of valuations.
JPMorgan’s revised earnings estimates reflect the scale of the shift. Its forecast for Delta Air Lines has been cut from $7.05 per share to a profit of just $0.15 in 2026, while its estimate for United Airlines has moved from $13.82 per share to a loss of around $1.
Despite the near-term deterioration, JPMorgan said its longer-term assumptions remain unchanged. The bank continues to model a return to pre-conflict jet fuel prices by 2027, arguing that a prolonged downturn could ultimately lead to capacity adjustments that benefit airline profitability in later years.
The bank said it will look for further guidance from airline management teams as the earnings season begins, with Delta expected to report first-quarter results on April 8.