United Airlines (UAL) and Southwest (LUV) Stock Drop as Jet Fuel Fears Grip Airlines

TLDR

• Airline stocks fell sharply after President Trump’s speech suggested the Iran war could drag on longer than markets had hoped.
• Jet fuel prices have surged around 70% since the start of the U.S. and Israel-led war with Iran.
• United Airlines (UAL) and Southwest (LUV) were among the worst performers on the S&P 500.
• TD Cowen cut price targets across the airline sector, citing elevated fuel costs and softening travel demand.
• TD Cowen lowered its UAL target to $120 (from $140) and LUV target to $46 (from $56), but kept Buy ratings on both.

Airline stocks took a hit on Thursday after President Trump’s latest remarks on the Iran war dashed hopes of a quick resolution. Wall Street had been banking on a swift end to the conflict — and the fuel price relief that would come with it. That optimism evaporated fast.

United Airlines (UAL) fell 3.2% and Southwest Airlines (LUV) dropped 2.3%, landing both among the worst performers on the S&P 500, which itself was down just 0.2%.

United Airlines Holdings, Inc., UAL

Delta Air Lines (DAL) slid 1.4%, JetBlue (JBLU) fell 1.8%, and American Airlines dropped 3.8%. The U.S. Global JETS ETF declined 2%.

Trump said Wednesday that the war with Iran is “nearing completion” but added that “we must honor the dead by completing the mission.” Markets read between the lines: the conflict isn’t wrapping up anytime soon.

Jet fuel prices have surged roughly 70% since the U.S. and Israel-led war with Iran began. The U.S. Gulf Coast Kerosene-Type Jet Fuel Spot price peaked at $4.344 per gallon on March 20 — the highest since May 2022. Before the war started on Feb. 27, it sat at $2.428 per gallon.

That kind of move makes profitability extremely difficult for carriers.

TD Cowen Cuts Targets Across the Sector

TD Cowen analyst Tom Fitzgerald trimmed price targets across the group on Thursday. He pointed to the likelihood of prolonged high energy prices and decelerating credit card spending data as reasons to dial back expectations.

“We lower our estimates for the big 6 U.S. airlines with fuel looking likely to remain elevated vs. antebellum prices for the remainder of 2026,” Fitzgerald wrote.

TD Cowen cut its United Airlines target to $120 from $140, keeping a Buy rating. The firm views Delta as the most defensive play right now, but still sees United as the most attractive long-term option.

For Southwest, TD Cowen lowered its target to $46 from $56, also maintaining a Buy. The firm noted its Southwest earnings estimates are now running below broader market consensus heading into Q1 results.

Fitzgerald flagged that airlines with “higher leverage levels and/or greater fuel sensitivity” face the toughest near-term conditions. He specifically named American Airlines, JetBlue, and Alaska Air Group as the most exposed.

Southwest Under Pressure as Estimates Fall Below Consensus

Southwest is entering earnings season in a tricky spot. TD Cowen’s below-consensus estimates, combined with softening demand signals and rising costs, set a low bar — but also a risky one.

Southwest is down 7.1% year-to-date, with an average daily trading volume of over 10 million. Its market cap sits at $18.78 billion.

Despite the target cuts, TD Cowen held Buy ratings on both UAL and LUV, suggesting the weakness is viewed as cyclical rather than structural. Fitzgerald noted that “further volatility” could create “attractive buying opportunities” in United.

The U.S. Gulf Coast jet fuel spot price remains near multi-year highs heading into Q1 earnings season for the sector.

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