Air transport

Planes, with high fuel prices come the first bankruptcies

Those in receivership will struggle to present a restructuring plan. Fuel shortage begins to take its toll

by Mara Monti

23 March 2026

4' min read

Translated by AI

Versione italiana

4' min read

Translated by AI

Versione italiana

Soaring fuel prices and the prospect of a shortage of aviation kerosene are having a heavy impact on air transport, and the first victims of this crisis are being counted. These are airlines that were already in difficult situations and had hoped for external intervention, for example through a takeover, but in this scenario will hardly be able to close the loop.

On the list are the British carrier Eastern Airlines, Royal Philippine Airlines and the AmericanSpirit Airlines: the latter in bankruptcy administration twice in one year has already said that rising fuel prices will make it even more difficult to exit 'Chapter 11'.

Heavy losses are expected for the sector

The scenario is becoming more difficult with each passing day as the possibility of a blitzkrieg recedes. And so while carriers with large capacity use hedging instruments against fuel increases, raise fares and reduce capacity, "smaller airlines are experiencing financial difficulties due to high operating costs," according to Fitch Ratings. Fuel accounts for between 25% and 35% of an airline's operating costs, and with jet fuel prices jumping from $85-90 per barrel to $150-200 per barrel, heavy losses are expected for the industry since the US and Israel launched attacks on Iran last month.

On the list of those who did not make it was the Royal Air Philippines, the national airline of the Philippines that was forced to cancel all its commercial flights and went into receivership. Between 3,000 and 4,000 passengers were reportedly stranded. The airline's website reads: 'We are working to make refunds and hope to resume flights at an as yet unspecified future date. We thank you for your patience and understanding. We look forward to welcoming you on board soon'. Although commercial flights have been cancelled, the carrier continues to operate cargo connections.

The Philippines is the country that is suffering the most since much of its oil is imported from the Middle East. President Ferdinand Marcos Jr. himself admitted that the country risks grounding aircraft due to the shortage of jet fuel caused by the war in Iran, a 'real possibility' he said.

A difficult scenario that does not help those already in receivership such as the British carrier Eastern Airlines, which had already cancelled all its flights last year after 28 years of operation. The company operated regional services from several UK airports, with connections to Ireland and Europe with around 200 flights a day before the crisis. It had also entered into an agreement with KLM Cityhopper for European flights, a contract that had not been renewed, adding to the crisis. Its court-appointed administrator had told English newspapers: 'We would welcome expressions of interest from potential alternative operators or anyone who may be interested in the underlying assets', but so far no expressions of interest have arrived.

Also seeking a possible merger is Spirit Airlines, the American low-cost airline that has ended up in 'Chapter 11' twice in one year. The restructuring plan presented to the court by the CEO a few days ago envisages a drastic reduction in operations and a fleet of around eighty aircraft compared to the 230 before the crisis. In the list of potential solutions also the sale of the carrier, but the volatility of fuel prices is raising doubts on the success of the operation: if the cost of fuel should remain high, the carrier will have less margin to compete with its rivals in terms of air ticket prices, especially since airlines around the world are already raising fares to defend margins.

Node costs but also availability

As the cost of fuel continues to rise, the risk now is its availability after the attacks on refineries. Iata Director General Willie Walsh warned last week that if the conflict continues airlines will have to reduce capacity due to the shortage of jet fuel. In Burma, several airlines have temporarily suspended domestic flights due to kerosene shortages. Bucking the trend is Kenya Airways whose demand for its flights has been rising since the start of the conflict with the load factor, the fill factor of planes, almost 100% from 70% in January. However, the company said it has about 56 days' worth of fuel stocks and is making efforts to get more from India.

In Asia, airlines are drawing up contingency plans as the escalating conflict in the Middle East threatens to trigger the worst oil shock since the 1970s. Vietnam Airlines is temporarily suspending about 23 flights on some domestic routes, while VietJet Aviation is reducing flight frequency. Another Vietnamese airline, Bamboo Airways said it will try to maintain flights during peak periods, but warned that services could be lower than last year if oil prices remain high. Vietnam has recently requested support for fuel supplies from several countries, including Qatar, Kuwait, Algeria and Japan, and on Monday signed an agreement with Russia on oil and gas production in both countries.

In the US, United Airlines said it will reduce its least profitable flights over the next two quarters, preparing for a prolonged period of high prices, even though strong travel demand has allowed US carriers to raise fares. Finally IAG, the holding company that controls British Airways and Iberia, said it had no immediate plans to raise ticket prices, as it had hedged much of its fuel by insuring against the risk of price increases.