Executive Summary

• Spot Gulf Coast jet fuel surged to $4.30/gal on Thursday (+102% YoY) before easing to $3.82 on Friday, while the forward curve now implies $3.30 average in 2Q26, declining to $2.73 in 3Q and $2.41 in 4Q amid uncertainty around the Strait of Hormuz.

• U.S. airlines have largely moved away from fuel hedging given historically uneven economics and a post-shale view that greater domestic supply—and the prospect of “peak oil” demand over the next decade-plus—would structurally temper oil price risk, a stance now being tested by Middle East-driven volatility.

• Using the current forward fuel curve, we updated 2026 EBITDA expectations across our coverage, with Delta down ~7% YoY aided by its owned refinery, Southwest still improving YoY on revenue/profit initiatives, and United down ~24% YoY with investment grade progress viewed as delayed rather than derailed.

• American screens as the most pressured large-cap carrier in our work, with EBITDA down ~46% YoY, leverage rising to ~12.3x (from 6.7x adjusted last year), and ~$1.5bn of cash burn likely requiring incremental actions alongside potential first-lien issuance capacity of ~$13bn.