Airlines are among the most exposed sectors to a prolonged Iran conflict, with rising fuel costs and weakening demand expected to put pressure on earnings, according to Fitch Ratings.
The agency said carriers would face “the most acute pressure” from higher oil prices, noting that jet fuel accounts for around 20% of operating costs. Many North American airlines have not fully hedged their fuel exposure, leaving them vulnerable to sustained price increases, while JetBlue and WestJet were identified as having the least headroom to absorb shocks.
Fitch’s adverse scenario assumes oil prices average $100 a barrel in 2026, alongside tighter financial conditions and weaker markets. Global equity prices are projected to fall about 10%, while US 10-year Treasury yields rise by 50 basis points and credit spreads widen. The scenario would push inflation up by 1.4 percentage points and reduce GDP by 1.2 percentage points relative to the agency’s base case.
Beyond direct cost pressures, airlines are also exposed to broader demand weakness as higher inflation erodes consumer spending. Fitch said consumer-facing sectors would be hit by second-order effects of the conflict, with discretionary travel particularly sensitive to rising prices.
In a more severe variant of its scenario, Fitch said oil prices could spike to $128 a barrel in the second quarter of 2026 before averaging $100 for the year, compared with a baseline of about $70. Under this scenario, global economic output would be about 0.8% lower after four quarters, reflecting tighter financial conditions and sustained energy market disruption.