Air transport

Airlines, Iranian shock stalls quarterly accounts

From Air France-KLM to Lufthansa, the industry unveils its first three months' results amidst the fuel chaos that, according to Bank of America, could lead to a 5% ticket increase in Europe.

by Mara Monti

27 April 2026

4' min read

Translated by AI

Versione italiana

4' min read

Translated by AI

Versione italiana

The European airlines' quarterly results season begins in one of the most turbulent phases in recent years, the worst since the 2020 pandemic. Opening the dances by presenting its first-quarter results next Thursday will be the Franco-Dutch carrier Air France-KLM, which has increased its ticket price by €50 as a fuel subsidy since the start of the war in Iran. In turn, Dutch KLM cancelled 80 round-trip flights from Schiphol airport to Amsterdam, while Scandinavian SAS cancelled 1,000 flights due to increased fuel costs.

Drastic also the German Lufthansa which, due to a series of strikes that aggravated the crisis, put an end to the CityLine division, withdrawing 27 aircraft and reducing capacity on the rest of the network: away with the oldest and least efficient aircraft, such as some Boeing 747s, known for their high fuel consumption. The result was a reduction of 20,000 short- and medium-haul flights by October, a decision that equates to about one per cent less capacity on the market. The German airline also announced a new Economy Basic fare on scheduled flights, whereby only a small bag will be carried on board free of charge, while a trolley bag will be charged for.

The effects of the conflict on the airline industry, initially limited to the Gulf and Middle East area - with the closure of airspace and the cancellation of thousands of flights - are now spreading like wildfire. Companies are reacting in no particular order to the increase in fuel costs, which have doubled since the beginning of the war, hoping that this is a temporary phenomenon and trying above all to resist, because the situation is fluid and the news contradicts itself from day to day: from the opening or closing of the Strait of Hormuz to the hypothesis of a truce between Iran and Lebanon. This scenario confuses analysts, who are forced to continually update their forecasts.

Uncertainties on fuel supply weigh like a boulder, which could become critical if the cease-fire does not hold and if naval traffic through the Strait of Hormuz - from which Europe obtains about 40% of its aviation fuel, according to industry estimates - remains limited. In mid-April, the IEA (International Energy Agency) reported that Europe's aviation fuel stocks would only be sufficient for six weeks. This echoes comments by ACI, the association of European airports, that shortages could start as early as May.

Despite these alarms, analysts remain confident that the war could end relatively soon, not least because Donald Trump is looking for an agreement so as not to jeopardise the midterm elections. However, even if the conflict ends tomorrow, it will take months before the situation returns to normal.

While waiting to see what happens, the results of the first quarter will be an opportunity to take stock, although the figures do not yet fully register the impact of the fuel price hike. This is because European airlines are hedged between 70% and 80% against the risk of rising jet fuel costs; for the portion not hedged (between 20% and 30%), physical settlement is delayed. This means that fuel costs for March, the last month of the quarter, are still based on pre-war prices.

Confirmation of this dynamic comes from Ryanair's CEO, Michael O'Leary, who explained in a meeting how the low-cost airline is 80% covered until March 2027 at a price of USD 67 per barrel, thanks to contracts signed before 28 February, the date on which the 'Epic Fury' mission was launched. The remaining 20 per cent of uncovered fuel was priced in March at the February, hence pre-conflict, reference prices of $75 per barrel. In April, on the other hand, the reference price was that of March, at the height of the conflict, which rose to USD 150 per barrel: an increase that cost about USD 50 million more in a single month. The company estimates that if prices remain at these levels, the additional cost of fuel over the next 12 months could reach USD 600 million.

Beyond the conflict, the first three months of the year are traditionally the most difficult for airlines, as travel declines after the Christmas break. Considering that the conflict began on 28 February - thus limiting the effects in the quarter to just one month - Bank of America analysts cut their forecasts for quarterly EBIT by 9%, but remain confident about the rest of the year, believing that 'capacity cuts will support fares in response to rising fuel prices'. With this in mind, they have raised their revenue estimates by 2% for 2026, assuming 3-4% growth in unit revenue over the year. By how much will fares have to increase to cover these costs? Bank of America estimates that ticket prices in Europe will have to rise by about 5% to compensate for the high fuel prices, with the impact being more pronounced in the second half of the year, when the financial hedges expire.

Europe remains relatively well positioned, being preferred over exotic destinations considered more uncertain. However, short-term bookings remain below last year's levels due to geopolitical tensions, while demand remains solid for the central summer months: those who have already chosen their destination tend to buy their ticket now to avoid later increases.

Nevertheless, easyJet's update - which estimated a loss of between EUR 540 million and EUR 560 million in the first half of the year, in line with consensus - raised new concerns about summer peak demand and fares. Among legacy carriers, those with exposure to the North Atlantic and South America and less to Asia, such as IAG (British Airways and Iberia), are less affected by the tensions in the Gulf and are therefore relatively sheltered.