Key Takeaways
- Major airline stocks experienced significant declines following President Trump’s comments indicating the Iran conflict may persist longer than anticipated.
- Jet fuel costs have 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 worst-performing stocks during Thursday’s session.
- Investment firm TD Cowen reduced price targets for major airline carriers, pointing to high fuel expenses and weakening consumer travel patterns.
- UAL’s price target was reduced to $120 from $140, while LUV’s dropped to $46 from $56, though TD Cowen maintained Buy recommendations for both carriers.
Major U.S. airline stocks experienced sharp declines Thursday following President Trump’s recent statements regarding the ongoing Iran conflict, which dampened investor expectations for a near-term resolution. Market participants had been anticipating a swift conclusion to hostilities — along with the accompanying relief in fuel costs. Those hopes quickly dissipated.
United Airlines (UAL) shares retreated 3.2% while Southwest Airlines (LUV) stock declined 2.3%, positioning both carriers among the day’s poorest performers on the S&P 500, which registered a modest 0.2% decrease.
United Airlines Holdings, Inc., UAL
Delta Air Lines (DAL) slid 1.4%, JetBlue (JBLU) fell 1.8%, and American Airlines dropped 3.8%. The U.S. Global JETS ETF declined 2%.
During Wednesday’s address, Trump characterized the Iran war as “nearing completion” while emphasizing that “we must honor the dead by completing the mission.” Investors interpreted the message as confirmation that hostilities won’t conclude quickly.
Jet fuel costs have climbed approximately 70% since the beginning of the U.S. and Israel-led military campaign against Iran. The U.S. Gulf Coast Kerosene-Type Jet Fuel Spot price reached $4.344 per gallon on March 20 — its highest level since May 2022. Prior to the conflict’s start on February 27, the price stood at $2.428 per gallon.
Such dramatic price increases create severe profitability challenges for airline operators.
TD Cowen Slashes Price Targets for Major Carriers
TD Cowen analyst Tom Fitzgerald reduced price targets across multiple airline stocks Thursday. He cited expectations for sustained elevated energy costs and declining credit card spending trends as justification for lowering 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 wrote.
TD Cowen reduced its United Airlines price target to $120 from $140 while maintaining a Buy rating. The firm characterizes Delta as the most defensive option currently, though it still considers United the most compelling long-term investment.
For Southwest, TD Cowen lowered its price objective to $46 from $56 while also retaining a Buy rating. The firm acknowledged that its Southwest earnings projections now fall below consensus Wall Street estimates ahead of Q1 earnings.
Fitzgerald highlighted that carriers with “higher leverage levels and/or greater fuel sensitivity” confront the most challenging near-term operating environment. He specifically identified American Airlines, JetBlue, and Alaska Air Group as most vulnerable.
Southwest Faces Headwinds as Analyst Estimates Trail Market Consensus
Southwest approaches earnings season in a challenging position. TD Cowen’s below-consensus projections, paired with indicators of softening demand and climbing expenses, establish a low hurdle — but also an uncertain one.
Southwest shares are down 7.1% year-to-date, with average daily volume exceeding 10 million shares. The carrier’s market capitalization stands at $18.78 billion.
Despite lowering price targets, TD Cowen retained Buy ratings on both UAL and LUV, indicating the firm views current weakness as temporary rather than fundamental. Fitzgerald observed that “further volatility” may generate “attractive buying opportunities” in United.
U.S. Gulf Coast jet fuel spot prices remain near multi-year peaks as the airline sector approaches Q1 earnings season.
