U.S. airlines weathered the storm of high fuel prices in the second quarter and are expected to project even bigger revenue growth through the back half of the summer, according to analysts.
Delta Air Lines kicks off the airline earnings season on Friday, in which carriers are expected to showcase the resilience of air-travel demand in recent months despite high inflation and economic strain from the war in Iran.
Carriers have been flying less and charging more for plane tickets after the war sent oil prices--and thus jet-fuel prices--surging in the spring. Travelers continued to pay those higher prices, allowing airlines to keep fares elevated even as the cost of jet fuel has receded.
"Demand trends stayed shockingly resilient, led by strong corporate travel and a high-end consumer with the ability to weather an uptick in inflationary pressure," Melius Research analysts Conor Cunningham and Patrick Coleman said in a research note Tuesday.
Thanks to that combination of steady demand and a roughly 20% increase in fares, the top U.S. airlines are expected to report second-quarter revenue growth in the double-digit-percentage range, UBS analysts Atul Maheswari and Thomas Wadewitz said in a report last month. Earnings will probably be in line with expectations, they said.
Revenue growth could accelerate even further through the summer. Flights in the third quarter were likely booked at higher fares than the second quarter, and the supply of flights this quarter are expected to shrink slightly, the UBS analysts said.
Fuel costs, meanwhile, won't be as high in the third quarter as they were in the second, meaning accelerated revenue growth would translate to better earnings than currently projected, several analysts said.
"[The third quarter] is setting up to be a unicorn-type event for the airlines," the Melius analysts wrote. "It's hard not to appreciate a moment like this, given how rare they are."
Delta and United Airlines, the industry's profit leaders, are on track to keep their dominant positions intact this earnings season. Delta used its own refinery in the second quarter to mitigate the fuel-cost damage, United has been showing steady revenue momentum, and both carriers have proven their ability to durably generate cash in tough operating conditions, analysts said.
American Airlines seems to be making progress on narrowing the margin gap between it and its rivals, and management struck a constructive tone around second-quarter demand at a late-May conference, Raymond James analysts Savanthi Syth and Carter Eades said in a research note Monday.
Southwest Airlines looks poised to post higher revenue growth for the second quarter than its rivals as more of its internal initiatives, such as charging for premium or preferred seats, come online, analysts said.
Analyst forecasts are dicier for discount carriers than their top-of-the-industry peers, though the collapse of Spirit Airlines could provide them with a boost. Frontier Group Holdings and JetBlue Airways are the biggest beneficiaries of Spirit's demise and could have a clearer path to profitability going forward, several analysts said.
Write to Dean Seal at dean.seal@wsj.com
(END) Dow Jones Newswires
July 09, 2026 15:18 ET (19:18 GMT)
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