By Callum Keown

Airlines and other travel stocks were among the biggest decliners early Monday -- and rising oil prices are to blame.

Southwest Airlines, United Airlines, Delta Air Lines and Norwegian Cruise Line Holdings were all down more than 2% in premarket trading as Brent crude futures jumped around 4% after Iran and Israel exchanged fire, threatening hopes for a peace deal. Royal Caribbean and Carnival both fell more than 1%.

When it comes to airlines, investors are also digesting a warning from the International Air Transport Association. The trade association slashed its net profit forecast for global airlines to $23 billion, from a previous estimate of $41 billion. It's also roughly half the $45 billion net profit recorded last year.

Fuel costs are the big reason, which the IATA sees rising around $100 billion to $350 billion this year. Jet fuel prices are expected to average $152 per barrel for the year, it said, up almost 70% from the previous year.

"All airline bottom lines are suffering from the rapid 70% rise in jet fuel prices. Some of the additional cost is being recuperated by adjusting prices and improving efficiency, but it will not be sufficient to maintain profitability at the previous year's level," the IATA's director general Willie Walsh said.

North American airlines are expected to contribute $9.4 billion of the $23 billion estimated net profit -- down from $12.4 billion last year.

U.S. carriers have "strong incentives" to hike prices to cover the rapidly rising costs as they have moved away from fuel hedging, the IATA said in its report. "North America is likely to see a predominantly price-driven adjustment, with widening segmentation between resilient network carriers and more constrained low-cost operators," it added.

Delta, United and American Airlines -- a Barron's stock pick -- have proved fairly resilient, up 56%, 26% and 14% over the past year. Southwest is also up 24% over the same period.

The profit warning most applies to overseas airlines or low-cost operators. America's biggest airlines should be just fine.

Write to Callum Keown at callum.keown@dowjones.com

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June 08, 2026 07:10 ET (11:10 GMT)

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