US airline stocks near potential bottom as UBS cuts estimates on rising fuel costs
Shares of major US airlines have tumbled in recent weeks, but UBS analysts say the worst may be over even as elevated jet fuel prices force the bank to slash earnings estimates and price targets across the sector. Several carriers are expected to preannounce first-quarter results this week,...
Alaska Air Group(NYSE:ALK) View Price & Profile US airline stocks near potential bottom as UBS cuts estimates on rising fuel costs
Published: 16:04 16 Mar 2026 EDT
Shares of major US airlines have tumbled in recent weeks, but UBS analysts say the worst may be over even as elevated jet fuel prices force the bank to slash earnings estimates and price targets across the sector.
Several carriers are expected to preannounce first-quarter results this week, with UBS projecting most to hit the midpoint of guidance despite the recent fuel spike.
“Fuel spiked in early March, but airlines tend to hold two weeks of fuel inventory, implying higher fuel will impact only about 15 days of 1Q,” analysts wrote. “This should cushion the drag to 1Q EPS.”
United Airlines Holdings Inc (NASDAQ:UAL, XETRA:UAL1) is expected to benefit from cost savings and strong revenue per available seat mile (RASM), while American Airlines Group Inc (NASDAQ:AAL, XETRA:A1G) may see earnings fall toward the lower end of guidance due to higher fuel sensitivity. Delta Air Lines Inc (NYSE:DAL) and Alaska Air Group (NYSE:ALK) are likely to report near the midpoint, with Southwest Airlines Co (NYSE:LUV)'s revised first-quarter EPS at $0.46, slightly above guidance.
UBS noted that since late February, smaller carriers like Alaska Air have fallen around 30%, while United Airlines, American Airlines, and Southwest are down mid-20%, and DAL has dropped 17%. “If we use share price performance in 1H’22 as a guide, then it suggests that the bottom might be near for these airline stocks,” the analysts wrote.
Full-year 2026 estimates and price targets were lowered across the board, reflecting sustained around $3 per gallon fuel assumptions and partial pass-through to fares.
Updated targets include $83 for Delta, $134 for United, $15 for American Airlines, $59 for Southwest, and $60 for Alaska Air Group.
UBS warned, however, that prolonged geopolitical tensions or higher inflation could still pressure demand.