Investment analysts are sharply downgrading their 2026 revenue forecasts for U.S. airlines ahead of the upcoming earnings season.
On April 8, Delta will be the first U.S. carrier to report first-quarter results. United, Southwest, American and other large U.S. carriers will follow later in the month.
In an analysis released on April 6, J.P. Morgan Chase analyst Jamie Baker wrote that hopes of profitability in 2026 have largely been dashed for all but Delta and Southwest, with United in the third-best position.
Morgan cited a "worrisome deceleration" in late March of daily air travel expenditures by holders of Chase credit cards as an indication that U.S. air travel demand has begun to wither among economic uncertainty and rising fares.
And, J.P. Morgan estimates that jet fuel will cost an average of $4.80 per gallon during the second quarter, which ends on June 30, and $4.90 for the second half of the year. Those figures compare to jet fuel prices that began the year just above $2 per gallon and were $2.50 on the eve of the Iran war in late February. Airlines won't be able to overcome that large a jump in fuel costs with higher fares, J.P. Morgan said.
They gave examples of how much their expectations have dramatically changed in recent weeks. J.P. Morgan now expects full-year earnings per share for Delta of 15 cents, down from its earlier estimate of $7.05. For United, it now expects losses per share of roughly $1, down from its earlier forecast of earnings per share of $13.82.
Baker still expects 2026 airline revenue to be in line with earlier forecasts. Bullish reports on revenue by airlines at the J.P. Morgan Industrials Conference in Washington last month had his team contemplating raising that forecast by 3% to 5% until the Chase credit card data informed them otherwise.
Deutsche Bank analyst Michael Linenberg has also downgraded his financial forecasts for U.S. airlines this year, though not as sharply as J.P. Morgan has.
In an analysis Tuesday, Linenberg projected an industrywide profit of $11.5 billion on $270 billion in revenue, amounting to a profit margin of 4%. Linenberg's Deutsche Bank team was previously forecasting a profit of $20 billion on $255 billion in revenue.
Linenberg now forecasts an annualized fuel bill for the industry of $72 billion, up from an earlier estimate of $47 billion. Recapturing that additional $25 billion through airfares would require average one-way prices to go up approximately $31, he said.
He forecasts that airlines won't be able to increase prices that much, but Deutsche Bank does have a more bullish view on demand than Baker. Linenberg forecasts airlines will compile $15 billion more in revenue this year than his previous expectation, recapturing 40% to 50% of added fuel costs this quarter and 75% to 80% of the larger fuel bill by the fourth quarter.