Here are the U.S. airlines most vulnerable to rising fuel prices

By Claudia Assis

Citi draws out a surprisingly eclectic list of U.S. airlines more at risk from 'dramatically' higher jet-fuel increases

United and American jets on the tarmac in Costa Rica. Fuel prices "have rallied dramatically" in recently days, pressuring airline stocks.

Not all airlines are made equal - and much less when it comes to withstanding growing pressure from a dramatic rise in fuel prices after the U.S.-Israel attacks on Iran and the ever-growing conflict in the Middle East.

The list of those most impacted, compiled by analysts at Citi on Tuesday, includes a U.S. major airline and a few low-cost carriers.

"Fuel prices have rallied dramatically recently, pressuring airlines," the Citi analysts wrote in a Tuesday note. Jet fuel is up almost 48 cents a gallon in the past week, which is greater than increase in crude oil, they said - U.S.-traded crude futures (CL.1) were up about $10 a barrel in the past week, whereas that 48-cent rise in jet fuel would be equivalent to about a $20-a-barrel move, the analysts said.

The U.S. Global Jets ETF JETS has shed 5.1% this week, while the S&P 500 index SPX has lost 1.9%.

To be sure, the actual fuel price paid by airlines varies, as some companies hedge that through derivatives and other mechanisms, and also differ depending on geographic sourcing, inventories and other differences.

"Demand strength may in part offset rising fuel prices - but, airlines with low-margins and high fuel expense as [a percentage] of revenue have the most sensitivity to fuel shocks," Citi said.

This includes American Airlines (AAL), JetBlue Airways (JBLU), Allegiant (ALGT) and Frontier Airlines (ULCC).

In contrast, airlines enjoying higher margins and lower fuel expense exposure - such as Delta Air Lines (DAL) and United Airlines (UAL)-"are less sensitive to fuel shocks," Citi said.

-Claudia Assis

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03-04-26 0645ET