Macroeconomic conditions are squeezing US airlines and travelers just in time for the summer travel season.<\/p>\n
Why it matters: Higher fuel costs due to the conflict in the Middle East are pushing up ticket prices. The latest Consumer Price Index report showed fares rose by about 3% in April. Meanwhile, choices for cheap seats decreased when Spirit Airlines went out of business in May. The ultralow-cost carrier blamed soaring energy prices. What does this uptick in energy inflation mean for airlines\u2019 profits and travelers\u2019 wallets?<\/p>\n
Nic Owens is an equity analyst for Morningstar and covers the North American airlines.<\/p>\n
11 Questions on 2026 Summer Travel and Airline OutlooksCan you talk about how the spike in energy prices is affecting the airline industry overall?How have carriers changed their profit outlooks for 2026? Does it line up with your forecast?Let\u2019s discuss travel demand. How do you think this year\u2019s travel season will compare to last year\u2019s?It remains unknown when elevated energy prices will decline. Can you talk about how far in the future airlines tend to buy their jet fuel?Delta, United, American, and Southwest Airlines make up the Big Four. Who\u2019s the most and least vulnerable in this environment?Spirit Airlines offered a cheap way to fly for bargain-seekers before shutting down. Do you think any of the Big Four will compete for Spirit\u2019s former customers? Is it more likely that a budget carrier will swoop in?What can travelers do now to save on their flights?A social media campaign is underway to bring back Spirit Airlines, and it appears that support is building. What does it take to revive a shuttered carrier?You recently lowered several airlines\u2019 fair value estimates, or what you think their stock is worth. Can you talk about that?Among the airlines you cover, are any of them undervalued or worth watching?What\u2019s the takeaway for travelers and airlines as they prepare for a more expensive summer travel season?Key Quote on 2026 Summer Travel Season<\/p>\n
It probably will be mostly the same. So far, through March, about the same number of people\u2014about 2% more actually\u2014were getting on planes. There are a couple of weeks at the end of April, early May that do look slower. On those earnings calls, the airlines said even though they had raised prices already, they weren\u2019t seeing people walk away.<\/p>\n
Nic Owens, equity analyst, Morningstar <\/p>\n
The Takeaway: Airlines are fueling their planes with more expensive fuel than they expected when this year started. The conflict in the Middle East is affecting supply. The carriers are raising their ticket prices to avoid losing money. Owens says his main concern for airlines is that if prices stay too high for too long, it could discourage leisure and less-loyal travelers from booking. Meanwhile, he says travelers who have already bought their tickets and made plans should enjoy their trips.<\/p>\n
More From Morningstar on Airline Stocks and the Energy Price Spike<\/p>\n
Morningstar\u2019s airlines analyst believes the market is misjudging the industry\u2019s profitability and airline stock value. Owens says, in his view, United Airlines and Air Canada are fairly valued. He believes Delta, American, and Southwest fall into the overvalued camp. He disagrees with the market\u2019s thinking that airlines selling mileage to credit card companies will perpetually generate money. The industry is cyclical and could lose profitability if a recession or renewed price competition arrives, he says.<\/p>\n
April CPI Report Shows Inflation Broadening As Energy Spike Impact Spreads<\/a><\/p>\n In this excerpt from The Long View<\/a>, noted economist Claudia Sahm discusses how investors can deal with supply shocks<\/a>. Morningstar\u2019s Global Markets Editor Tom Lauricella<\/a> stresses the importance of tracking geopolitical disruptions in this episode of Investing Insights<\/a>. Leslie Norton<\/a>, editor-at-large for Morningstar, highlights five trends to watch in a post-Iran war landscape<\/a>, including oil and gold prices.<\/p>\n Securities Mentioned in This Episode<\/p>\n Delta Air Lines DAL<\/a><\/p>\n United Airlines Holdings UAL<\/a><\/p>\n American Airlines Group AAL<\/a><\/p>\n