US President Donald Trump’s announcement of a two-week ceasefire with Iran has sparked optimism in airline stocks, yet industry leaders caution that the global aviation sector will not see immediate relief from the ongoing crisis. Executives emphasized that the challenges facing airlines, particularly regarding jet fuel supply, will persist for months despite the ceasefire.
Willie Walsh, director general of the International Air Transport Association (IATA), highlighted that even if Iran reopens the Strait of Hormuz, disruptions to Middle Eastern refining capacity mean it will take considerable time to restore jet fuel availability. Meanwhile, Delta Air Lines projected a lower-than-expected profit for the second quarter and plans to reduce capacity across its network to offset an anticipated $2 billion increase in fuel expenses during this period.
Fuel costs, which represent the second-largest expense for airlines after labor and typically account for about 27% of operating costs, have surged due to Iran’s closure of the Strait of Hormuz. This move severely restricted global jet fuel supplies. The ceasefire and the prospect of safe passage through the Strait triggered a rally in airline shares, while oil prices dropped below $100 per barrel following Trump’s announcement, contingent on the Strait’s immediate reopening.
Nevertheless, industry experts warn that jet fuel prices will remain elevated despite a potential decline in crude oil prices. Walsh explained that the impact on refinery operations in the Middle East will prolong supply constraints, requiring months to normalize fuel availability even if the Strait remains open.
Jet fuel prices have more than doubled since the conflict began, outpacing the roughly 50% increase in crude oil prices prior to the ceasefire. This surge has forced airlines worldwide to raise ticket prices, reduce flight frequencies, carry additional fuel from home airports, and add refueling stops, all of which strain operational efficiency and test consumer willingness to pay higher fares.
Delta anticipates paying approximately $4.30 per gallon for jet fuel in the June quarter, an increase that adds over $2 billion to its costs compared to the previous year. Despite these challenges, airline and travel stocks experienced significant gains. Shares of Australia’s Qantas Airways rose over 9%, Air New Zealand climbed more than 4%, Hong Kong’s Cathay Pacific increased by 5%, and India’s IndiGo surged 8%. In Europe, travel operator TUI jumped over 12%, Wizz Air gained 10%, Air France-KLM rose around 14%, and Lufthansa increased by 11%, outperforming broader European equity indexes. U.S. airlines also saw positive premarket trading activity.
Analysts at Panmure Liberum noted that while jet fuel supply disruptions remain a concern, the ceasefire has created a buying opportunity for quality airline stocks.
In a related development, TUI is exploring options for its two cruise ships, “Mein Schiff 4” and “Mein Schiff 5,” which have been stranded in Abu Dhabi and Doha since the conflict began. The vessels are currently maintained by skeleton crews, and it will take at least four weeks to prepare them for upcoming voyages, depending on route, weather, and operational factors.
Looking ahead, the Middle East’s tourism sector, valued at approximately $367 billion, is expected to face a prolonged recovery period even if key transit hubs reopen. Oxford Economics economist Aaron Goldring indicated that the impact on traveler sentiment will linger for around seven months after the ceasefire, with perceptions of safety improving gradually over time.
