What’s News in Earnings: Airlines Feel the Pain of an Oil Shock

Summary

WSJ What’s News Podcast Summary

Episode: What’s News in Earnings: Airlines Feel the Pain of an Oil Shock

Date: April 30, 2026
Host: Jacob Passi
Guest: Allison Sider (WSJ Airline Reporter), Joanna Garrity (JetBlue CEO), Andrew Nacella (United CCO)

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Episode Overview

This episode addresses the impact of soaring jet fuel prices, driven by the war with Iran, on the airline industry's financial results. The discussion looks at how airlines are responding with fare hikes, schedule cuts, and increased fees, and how both mainstream and budget carriers are coping. The show also examines the government’s potential role in bailing out struggling budget airlines.

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Key Discussion Points and Insights

The Fuel Price Shock and Airlines’ Bottom Lines

• Fuel Costs Have Skyrocketed:
  • Jet fuel prices have nearly doubled since the Iran conflict began, now around $4 per gallon versus $2 previously.
  • Delta forecasts a $2 billion year-over-year fuel expense increase this quarter alone; American Airlines expects to pay an extra $4 billion this year.
    Allison Sider (01:49):

    “Delta expects its fuel expense for this quarter to be $2 billion more than a year ago. American is saying it's going to pay an extra $4 billion in fuel this year, so it's really going to squeeze their profit margins for the rest of the year.”

• Profit Margins Under Pressure:
  • Increase in costs directly threatens profitability and is forcing airlines to reconsider their guidance. Joanna Garrity, JetBlue CEO (01:11):

    “We are suspending our prior full year guidance as we aggressively adjust to the evolving macro backdrop.”

Airlines’ Tactical Responses

• Raising Fares and Fees:
  • Fares are climbing across the board; baggage fees increased by around $10 at most airlines, with the first checked bag now typically costing $45. Allison Sider (02:43):

    “Bag fees really rarely come down. And if and when fuel prices get back to more normal levels, probably shouldn't expect to see those bag prices come down.”

• Schedule Adjustments:
  • Airlines are cutting flights that are less profitable, especially on days/times with lower demand such as Tuesdays, Wednesdays, and Saturday afternoons. Allison Sider (02:16):

    “Airlines are cutting back on flights that maybe would have been profitable with jet fuel prices of $2 per gallon but now are not going to make money with jet fuel prices around $4 per gallon.”

• Demand Resilience:
  • Despite higher fares, demand for travel remains robust. Allison Sider (03:10):

    "It seems like consumers are still clamoring for travel and they're still booking trips. Airlines are saying demand is holding up really well." Andrew Nacella, United CCO (03:35):
    “There should be some level of demand reduction related to a 20% fare increase. We haven't seen it yet, and if we don't, you know, it's a really great outcome, but we're planning for that.”

Budget Airlines Under Extreme Pressure

• Disproportionate Impact:
  • Budget carriers like Spirit, Frontier, and Avelo are particularly vulnerable. Their lower fares make fuel cost hikes more devastating to their business models. Allison Sider (04:00):

    “If your customer is buying a $6,000 business class ticket, the extra that they might be paying in fuel is something that they may not even notice...budget carriers seem to be the ones that are in the most trouble.”

• Spirit on the Brink:
  • Spirit's plan to exit Chapter 11 bankruptcy is threatened; they're negotiating a $500 million government loan in exchange for warrants. Allison Sider (04:32):

    “It's really kind of day by day at this point. Whether they're going to get that worked out before they run out of cash.”

• Wider Bailout Requests:
  • Other budget carriers have joined in, asking the Trump administration for a combined $2.5 billion, also offering warrants in exchange. Allison Sider (04:58):

    “We’ve seen in the last couple of days that they've also gone to the Trump administration to ask $2.5 billion...”

Government Involvement

• Unusual Market Intervention:
  • The scale of direct government assistance sought, with warrants exchanged for loans, is atypical and would change the competitive landscape. Allison Sider (05:20):

    “It would be sort of unusual to have the government intervene in the market in this way.”

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Notable Quotes & Memorable Moments

• JetBlue CEO on Industry Outlook (01:11):

  “...the most difficult period in years given the sharp increase in the price of fuel and the expectation for elevated prices throughout this year.”

• United CCO Andrew Nacella on Demand (03:35):

  "There should be some level of demand reduction related to a 20% fare increase. We haven't seen it yet..."

• Allison Sider on Bag Fees (02:43):

  “Bag fees really rarely come down... don't expect those bag prices to come down.”

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Timestamps for Important Segments

• 00:34 – Introduction and Episode Theme
• 01:11 – JetBlue suspends full-year guidance, CEO quote
• 01:49 – Fuel price impact, cost examples (Delta, American)
• 02:16 – Schedule cuts and increased fees explained
• 03:10 – Consumer demand, fare hikes, and industry expectations
• 03:35 – Andrew Nacella (United CCO) remarks on demand
• 04:00 – Budget airlines and Spirit’s crisis
• 04:32 – Negotiations with Trump administration for loans
• 04:58 – Broader budget carrier bailout requests
• 05:20 – Potential for unusual government market intervention

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Conclusion

This episode delivers a clear overview of the airline industry's financial struggles tied to the oil shock, highlighting the differing impact on mainstream versus budget carriers, and the unprecedented requests for government intervention. The exploration balances financial data, strategic responses, and predictions for the upcoming travel season, offering an insightful, concise look at a sector in flux.

Transcript

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[Jacob Passi]

Hey listeners, it's Thursday, April 30th. I'm Jacob Passi for the Wall Street Journal and this is what's News in earnings. Our look at some of the biggest themes standing out this earnings season. It's been a turbulent quarter for airlines. The war with Iran has caused jet fuel prices to soar and that's putting a damper on airlines profits. While demand for travel is holding up, airlines are driving fares and fees higher and higher, and that's raising concerns that Americans may change their travel plans for this summer. JetBlue CEO Joanna Garrity told Wall street analysts this week that it was the most difficult period in years given the

[JetBlue CEO Joanna Garrity]

sharp increase in the price of fuel and the expectation for elevated prices throughout this year. We are suspending our prior full year guidance as we aggressively adjust to the evolving macro backdrop.

[Jacob Passi]

And some airlines are having an even more difficult time than JetBlue, and they're asking the Trump administration for help. We're joined now by Wall Street Journal airline reporter Alison Seider, who's been monitoring the state of play. Alison, higher oil prices are weighing on airlines. How big a deal is that for the bottom line and what are airlines trying to do to offset those costs?

[Allison Sider]

It's turning out to be a pretty big deal. Jet fuel prices have basically doubled since the start of the war in Iran and it's adding a lot of expense. Delta expects its fuel expense for this quarter to be $2 billion more than a year ago. American is saying it's going to pay an extra $4 billion in fuel this year, so it's really going to squeeze their profit margins for the rest of the year. In terms of what they're doing about it, you already probably have started seeing it in fares. They're going to be a lot higher. And we're starting to see airlines change their schedules and cut back on. We're especially seeing that airlines are cutting back on flights that maybe would have been profitable with jet fuel prices of $2 per gallon but now are not going to make money with jet fuel prices around $4 per gallon. So that is probably going to most impact Tuesdays and Wednesdays, Saturday afternoons, times when flights already kind of fly a little bit emptier. And the other thing we're seeing airlines do is increase fees. We've already seen bag prices increase by around $10. It's been pretty uniform across all the airlines. Now, a first checked bag is going to cost you probably around $45. And bag fees really rarely come down. And if and when fuel prices get back to more normal levels, probably shouldn't expect to see those bag prices come down.

[Jacob Passi]

How are consumers responding to the fare increases we've already seen? Do they still want to travel?

[Allison Sider]

It seems like consumers are still clamoring for travel and they're still booking trips. Airlines are saying demand is holding up really well. So so far, all the airlines seem almost pleasantly surprised that they're able to charge so much more without scaring customers away. And at United, chief Commercial Officer Andrew Nacella said on United's earning call that the airline is kind of waiting for that inflection point.

[JetBlue CEO Joanna Garrity]

There should be some level of demand reduction related to a 20% bear increase. We haven't seen it yet, and if we don't, you know, it's a really great outcome, but we're planning for that. If it doesn't turn out to be the case, we'll appropriately adjust our plans.

[Jacob Passi]

So we have mainstream carriers like Delta and United, and then there are the budget carriers like Spirit. How are budget carriers doing compared with their mainstream competitors?

[Allison Sider]

This is turning out to be a bigger problem for some of the budget carriers. Your average fare was, you know, 100, $120, and you have to tack on 30, 40, $50 for fuel. That's really noticeable. But if your customer is buying a $6,000 business class ticket, the extra that they might be paying in fuel is something that they may not even notice or they're just willing to put up with it. So, you know, the budget carriers seem to be the ones that are in the most trouble. We're seeing that most acutely with Spirit. The sudden run up in fuel prices really threatened its plan to emerge from chapter 11, which it was hoping to do in the next couple of months. And now it's on the precipice of liquidation, and it's in negotiations with the Trump administration for a loan of around $500 million. In exchange, it would give the Trump administration warrants to buy a really significant stake in the company. And it's really kind of day by day at this point. Whether they're going to get that worked out before they run out of cash. But the other budget carriers are struggling as well. And we've seen in the last couple of days that they've also gone to the Trump administration to ask $2.5 billion. And that's a group of carriers that includes Frontier and Avelo. They would also have to give up warrants to the administration if they ended up taking the money. So I guess we will see what happens. It would be sort of unusual to have the government intervene in the market in this way.

[Jacob Passi]

That was Wall Street Journal airline reporter Allison Sider. Thanks for joining us.

[Allison Sider]

Thanks for having me.

[Jacob Passi]

And that was what's News in earnings. Today's show was produced by Danny Lewis with supervising producer Tali Arbel. Additional sound courtesy of S and P Global Market Intelligence. Later today, we'll have the PM edition of what's News out for you as usual. And we'll be back later this earnings season, diving into another industry. Until then, I'm Jacob Passi. Have a great day.

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