US airlines lose close to $1 billion as fuel costs spiral amid Middle East conflict
Amid ongoing geopolitical turbulence that has resulted in the closure of the Strait of Hormuz and, subsequently, soaring jet fuel prices, airlines in the US reported a combined pre-tax operating profit of $912 million in Q1, 2025, with an after-tax net loss of $966 million.
The Q1, 2026 figures are a steep drop from the same period in 2025, when airlines reported a $209 million after-tax loss and a pre-tax operating gain of $154 million.
The Q1 2026 after-tax net income is also a sharp decline from a $3.6 billion gain in the final quarter of 2025.
Why have some US carriers suspended operations?
Some airlines, including American Airlines, have been forced to cancel or reroute flights due to rising fuel costs. American is also one of several carriers that have raised ancillary charges, increasing checked baggage fees, amid sharply rising fuel costs following the US-Israel-Iran conflict. Jet fuel prices have more than doubled since the start of the US-Israel-Iran conflict, with airlines now passing those costs on to passengers.
Delta Air Lines and United Airlines have also suspended flights to key destinations in the Middle East amid security concerns. Meanwhile, ultra-low-cost carrier Spirit saw its operations shut down completely in May, with the conflict and fuel costs the final blow for the already beleaguered carrier.
Air fares and labour top operating revenue and expenses
Of the total Q1 2026 $63.4 billion in operating revenue, air fares accounted for $46.2 billion (72.9%, down from 74.1% in Q1 2025). Baggage fees accounted for 41.9 billion (compared to 2.9% in the first three months of 2025), while reservation change fees accounted for $227 million (the same as in 2025).
Operating expenses in the first three months of 2026 totalled $62.4 billion, of which fares accounted for $10.9 billion (17.5% compared to 17% in Q1 2025), while labour accounted for $23.3 billion (37.3% compared to 37.4% in Q1 2025).
The breakdown of losses for domestic vs. international operations
While a total of 22 US airlines reported a $364 million profit in Q4 2025 for domestic operations, the BTS report found these airlines to have a $531 million loss (after-tax).
For international operations, 17 airlines recorded a $435 million loss after taxes in Q1 2026 (compared to a $269 million gain in Q4 2025 and a $52 million loss in Q1 2025).
Featured image: eqroy / stock.adobe.com
