Deutsche Bank Warns Energy Shock “Existential Threat” To Airlines, May Force Some To Ground Fleets

Flight disruptions tied to Operation Epic Fury in the Middle East exceeded 14,000 by the end of last week. While there were early signs of normalization by mid-week, the global aviation industry remains disrupted, with some of the weakest airlines facing an increased risk that surging energy prices could lead to the idling of commercial jet fleets.

The epicenter of the disruption is Persian Gulf airports and airlines. As of Friday, ten countries had closed their airspace, either partially or completely, since Operation Epic Fury against Iran began one week ago, according to Flightradar24 data.

Despite ongoing IRGC drone and missile attacks across Gulf states – sometimes targeting civilian infrastructure such as airports – some airports began resuming flights by midweek, including Dubai, Abu Dhabi, and King Khalid International near Riyadh, Saudi Arabia. However, there are reports of a direct strike on the airport in Dubai on Saturday.  

It is clear that flight disruptions across the Gulf states will persist as long as Operation Epic Fury continues. With U.S. CENTCOM stating overnight that the operation is only accelerating and only suggests disruptions will extend into next week.

The big risk flagged by Deutsche Bank analysts, led by Michael Linenberg, is that surging jet fuel prices could hit some of the weakest airlines.

With Brent crude futures up roughly 52% year to date and jet fuel up 100% to 125%, Linenberg warned clients in a note on Friday that “financially weakest carriers could halt operations.”

“Year-to-date oil prices are up ~50% while jet fuel prices are up 100% – 125%. Absent near-term relief, airlines around the world could be forced to ground 1,000s of aircraft while some of the industry’s financially weakest carriers could halt operations,” the analyst said.

Linenberg continued:

US jet fuel crack spreads (i.e., the difference between underlying oil prices and jet fuel prices) for Gulf Coast, New York Harbor, and West Coast now range from $85 to $95 per barrel, a level that is at or above the underlying feed stock – WTI oil price currently trading at $86.04 and Brent oil price $88.99 (see Figure 1 below).

The last time we witnessed this phenomenon was in 2005 when crack spreads of as high as $65 per barrel exceeded ~$60 per barrel oil prices in the aftermath of Hurricanes Katrina and Rita. The damage to the airline industry was significant and widespread including major airlines Delta and Northwest filing for Chapter 11 bankruptcy in September 2005.

He warned that surging crack spreads amount to a major headwind of more than $20 billion for the airline industry and identified the carriers he sees as most exposed:

Over the past month, we have seen jet fuel prices climb $2.00 per gallon (e.g., Gulf Coast jet fuel prices last close of $4.30 versus $2.24 on February 5, 2026). Our current industry forecast calls for the US airline industry to consume 20 billion gallons of jet fuel in 2026, which suggests a fuel price headwind in the $10s of billions on an annualized basis. This compares to our 2026 operating income forecast of ~$20 billion. In Figure 2 below, we highlight 2026 EPS sensitivity to fuel price changes on a ceteris paribus basis. In reality, airlines will respond to higher fuel prices.

For example, we estimate a $10 across-the-board fare increase sustained on an annual basis could add $7 – $8 billion to top-line. Other important considerations include the negative impact of higher fuel prices on the US economy, and more specifically on demand for air travel, particularly among the most price sensitive consumers.

Looking at airline stocks, the S&P 500 Passenger Airlines Index fell 12.6% on the week, marking its largest decline since the 18% drop in the first week of April 2025, when Trump and China argued back and forth over trade.

The index hits turbulence as soon as the operation began. 

Also see this:

• These EM Countries Face Greatest Risk If Energy Shock Spreads

This adds to the growing list of secondary effects from Operation Epic Fury: the next wave of flight disruptions may stem not from disrupted Gulf air hubs, but from the energy shock itself, which could force the weakest carriers to idle fleets.

Professional subscribers can read the full note at our new Marketdesk.ai portal.