AAL, UAL, DAL, LUV Stocks Surge Overnight: Airline Stocks Catch A Tailwind As US-Iran Deal Cools Fuel Fears

Falling oil prices and the reopening of the Strait of Hormuz improved profit expectations for carriers.

• American, United, Delta, and Southwest Airlines rose 3% to 4% overnight after the U.S. and Iran agreed to a peace framework. 
• Airlines have struggled with high fuel costs in 2026 as tensions in the Middle East have pushed oil prices higher. 
• IATA recently cut its airline profit outlook, warning that fuel costs could reach $350 billion this year.

Shares of American Airlines Group (AAL), United Airlines Holdings (UAL), Delta Air Lines (DAL), and Southwest Airlines (LUV) moved sharply higher overnight after news of a peace agreement between the United States and Iran raised expectations for lower fuel costs and improved operating conditions across the airline industry.

The U.S. and Iran have agreed on a peace framework to end the war, paving the way for the reopening of the Strait of Hormuz after more than 16 weeks of closure.

President Donald Trump announced on Sunday that the deal had been completed, saying the U.S. naval blockade would be lifted and ships would once again be able to move through the key oil-shipping route.

After the update, U.S. airline stocks gained between 3% and 4% overnight, ahead of Monday. 

Fuel Relief Drives Optimism

Airlines have spent much of 2026 battling elevated fuel costs as geopolitical tensions in the Middle East have kept oil prices high. Following the peace deal announcement, Brent crude futures expiring in August fell 4.6% to trade at around $83.3 a barrel at the time of writing, while WTI crude futures expiring in July. 

Fuel remains one of the industry's largest operating expenses. Earlier this month, the International Air Transport Association (IATA) reduced its outlook for airline profits after rising jet fuel prices pressured margins. 

Although passenger demand remains strong and industry revenue is expected to rise to $1.17 trillion, higher costs are putting pressure on earnings. IATA estimated that airline fuel costs will jump to about $350 billion in 2026 from $252 billion a year earlier, accounting for nearly one-third of total industry expenses.

IATA Director General Willie Walsh said airlines are raising ticket prices and improving efficiency to offset some of the extra costs, but those efforts will not be enough to maintain last year's profit levels.

The Strait of Hormuz is one of the world's most important oil shipping routes. Restrictions caused by the U.S.-Iran conflict disrupted global oil supplies and pushed fuel prices higher. With the route expected to reopen, traders anticipate improved oil and aviation fuel supplies, which could help lower fuel costs. 

Airlines Cut Forecasts 

Major U.S. airlines had previously revised their 2026 financial outlook amid higher fuel prices, signaling increased costs across the industry.

Several airlines have lowered their profit forecasts, pulled guidance, or chosen not to provide updated outlooks. American Airlines cut its 2026 earnings forecast in April and said it could end the year with a loss.

United Airlines also reduced its full-year profit outlook due to rising fuel costs. The airline now expects adjusted earnings of $7 to $11 per share, down from its earlier forecast of $12 to $14 per share.

Southwest Airlines and Delta Air Lines have kept their 2026 targets unchanged for now, but executives said meeting those goals will depend on fuel costs and revenue performance.

With crude retreating, investors are reassessing earnings prospects for major carriers that had previously lowered guidance or faced analyst downgrades.

So far this year, DAL, LUV and UAL stocks have gained 19%, 10% and 3%, respectively, while AAL declined over 2%.  

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