United Airlines (UAL) Stock Falls 10% As Fuel Costs Surge on Iran Conflict

TLDR

• UAL CEO Scott Kirby warned jet fuel prices could hit Q1 results “meaningfully,” with potential Q2 impact too.
• Jet fuel prices have jumped 15–20% in the past week due to the conflict in Iran.
• United’s Q1 adjusted EPS could fall to 5–22 cents vs. its January guidance of $1–$1.50.
• UAL stock is down ~10% since the conflict began, and fell 3.6% in Friday premarket trading.
• Alaska Air (ALK) is most exposed to the fuel spike; JetBlue (JBLU) least, due to geographic differences in fuel pricing.

United Airlines CEO Scott Kirby said Thursday that surging jet fuel prices could hit the carrier’s Q1 financial results in a “meaningful” way, and warned the pressure may stretch into Q2 if the Iran conflict continues.

United Airlines Holdings, Inc., UAL

Kirby made the comments at an event at Harvard’s John A. Paulson School of Engineering and Applied Sciences. Travel demand, he noted, remains resilient — but fuel costs are a different story.

Jet fuel prices have risen 15–20% over the past week. That’s a big number for an industry where fuel typically eats up around one-third of operating costs in normal conditions, and can push past 40% during periods of geopolitical stress.

Airlines stopped hedging fuel costs some time ago, given how difficult it is to hedge the spread between crude oil and gasoline prices. That leaves carriers fully exposed to swings like the ones seen this week.

According to Citi Research, crack spreads — the margin between crude oil and refined fuel products — have moved sharply and unevenly. Singapore Jet fuel is up more than $3 per gallon over the past week. NY Jet is up just over $1.

Regional Exposure Matters

That geographic gap means not all carriers feel the same pain. Alaska Air (ALK), with its heavy West Coast footprint, is most vulnerable to the Singapore-driven price spike. JetBlue (JBLU), operating primarily out of New York’s JFK, is in a better spot given the smaller move in NY Jet prices.

The broader sector has taken a hit. The U.S. Global Jets ETF has fallen about 6% over the past five days, with another 3% drop expected at Friday’s open.

For United specifically, the numbers are stark. TD Cowen now estimates UAL’s Q1 adjusted earnings per share could come in between 5 cents and 22 cents. Back in January, United guided for $1 to $1.50 per share. That’s a wide miss if the lower estimates prove accurate.

UAL Stock Under Pressure

UAL stock dropped 3.6% in premarket trading on Friday. As of Thursday’s close, the stock was down roughly 10% since the Iran conflict escalated.

The conflict has also caused over 20,000 flight cancellations globally and left thousands of passengers stranded, compounding the operational pressure on carriers.

United Airlines did not immediately respond to a request for comment from Reuters.

Kirby’s comments represent one of the clearest public warnings yet from a major U.S. airline CEO about the financial fallout from the Middle East situation.

The TD Cowen estimates factoring in current fuel prices represent the most recent available data point on where United’s Q1 results may land.

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