Jet Fuel Prices Surge: Raymond James Cuts Airline Estimates and Warns of JetBlue Bankruptcy Risk
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Jet fuel has jumped 39% this quarter. Raymond James cut earnings forecasts across its airline coverage and flagged Chapter 11 as a potentially "more prudent" path for JetBlue — the sector now faces a double squeeze of surging fuel costs and softening demand.
Why is jet fuel rising so much faster than crude?
U.S. Gulf Coast jet fuel is up 39% this quarter through August 19, far outpacing Brent crude's 26% gain and WTI's 21%.
This means → airlines are absorbing nearly twice the cost pressure that headline oil prices suggest.
The culprit is the refined-products market — the step that turns crude oil into usable fuel. The diesel crack spread — the price gap between refined products and crude — briefly topped $100 per barrel last week before easing to around $94 on Monday.
In plain terms = it is not crude oil that is expensive; it is the refining bottleneck that is squeezing airlines.
How much did the analyst cut?
Raymond James analyst Savanthi Syth raised her jet fuel price assumptions by roughly 18%, 14%, and 7% for H2 2026, 2027, and 2028 respectively, and cut earnings estimates across all airlines in her coverage accordingly.
The hit was partially offset by currency gains at non-U.S. carriers from a weaker dollar, but the net direction is still lower earnings.
This reflects a market that had materially under-priced fuel risk — an 18% one-time upward revision signals the prior assumption was far too optimistic.
Why is JetBlue singled out for bankruptcy risk?
Syth maintained her Underperform rating on JetBlue and explicitly flagged Chapter 11 restructuring — a U.S. legal process that lets a company reorganize debt under court protection while continuing operations — as a potentially "more prudent" resolution for its over-leveraged balance sheet.
Her 2026 EPS forecasts: JetBlue at −$2.43, American Airlines at −$0.51, Delta at $5.75 — all below Wall Street consensus.
This means → under the same fuel shock, JetBlue is not just the deepest in the red; its balance sheet may break before costs ease.
Is there an opportunity on the other side?
Syth upgraded Allegiant Travel (ALGT) from Outperform to Strong Buy — the only upgrade in the same report.
Her reasoning: ALGT's stock has fallen further this quarter, yet its ex-fuel fundamentals remain constructive — unique margin-recovery potential, a flexible capacity model, and growing scale benefits after closing the Sun Country Airlines acquisition.
In plain terms = both airlines got hit by the same fuel stick, but Allegiant's foundation is sturdier and more elastic — the analyst thinks the market has over-punished it.
What is happening on the demand side?
Summer travel demand has been broadly strong, but the latest TSA data — from the federal agency that screens passengers at U.S. airports — shows softening as summer winds down.
TSA passenger throughput is down about 2.6% year-over-year this quarter, while scheduled seat capacity fell only 1.1% — seats are being cut slowly, but passengers are disappearing faster. The gap is widening.
This means → airlines face a double squeeze: surging costs on the fuel side, slipping load factors on the revenue side. Whether JetBlue can repair its balance sheet without resorting to bankruptcy protection is shaping up as the market's key watch point.
Content is for reference only, not financial advice.