As jet fuel prices surge from the Middle East war, concerns are growing over performance pressure and flight disruptions across the global airline industry.
On the 23rd (local time), Bloomberg reported that Southwest Airlines, a U.S. carrier, posted first-quarter revenue of $7.25 billion (10.727825 trillion won), missing the market forecast of $7.29 billion (10.791387 trillion won). It also guided second-quarter earnings per share (EPS) at $0.35 to $0.65, seen below the market expectation of $0.59.
Southwest Airlines said it is maintaining its full-year 2026 outlook. However, the company said in this earnings release that "to meet the full-year targets, either fuel expense must decrease or revenue must increase," adding, "depending on conditions, we plan to adjust the full-year outlook later."
The main reason Southwest Airlines' results fell short of expectations is unstable jet fuel supply due to the Iran war. As the United States moved to a "counter-blockade" in response to a blockade of the Strait of Hormuz, Iran's crude oil exports were cut off, deepening supply bottlenecks across the jet fuel market. According to the International Air Transport Association (IATA), since the outbreak of the Iran war, European jet fuel prices have risen more than 120%.
Southwest Airlines is not the only one facing heavier performance pressure. Earlier, United Airlines slashed its full-year earnings per share outlook to $7 to $11 from $12 to $14. First-quarter revenue and net income rose 10.6% and 80.6%, respectively, from a year earlier, showing a solid trend, but it sharply lowered its annual outlook to reflect rising future expense pressure. Delta Air Lines and Alaska Airlines also either did not provide or withdrew their full-year guidance.
Delta Air Lines CEO Ed Bastian said fuel expense this quarter is expected to be about $2.5 billion (3.698 trillion won) higher and that there is a strong possibility the carrier will cut back or readjust low-margin routes. He said, "This situation will be a major test for the airline industry as a whole."
European airlines are in a similar position. German carrier Lufthansa announced on the 21st that it will cancel about 20,000 short-haul flights through October. Lufthansa said the move is aimed at reducing losses on unprofitable routes after losses from strikes and the surge in oil prices due to the Middle East war. Dutch carrier KLM also decided to cut operations on 160 flights next month. Scandinavian Airlines (SAS) announced it will cancel 1,000 flights in April.
Bloomberg said the shock of this war was initially limited to Middle Eastern airlines, airports, and airspace, but has now spread like an epidemic, shaking overall global air travel demand. In particular, with the high-revenue summer peak season ahead, even the possibility of a demand slowdown is being raised, heightening industry anxiety.
Fatih Birol, head of the International Energy Agency, warned that "jet fuel inventories in Europe are only about six weeks' worth, and if the situation drags on, it could lead to mass flight cancellations."