Fuel Prices to Stay High for Long? Airlines ETFs in Focus

United Airlines UAL is trimming more unprofitable routes over the next two quarters as it braces for a prolonged surge in jet fuel prices due to the Iran war, as quoted on CNBC. The move comes even as strong travel demand has enabled U.S. carriers to raise fares.

CEO Scott Kirby said in a staff memo that the airline is preparing for oil prices to climb as high as $175 per barrel and remain above $100 through 2027, the same CNBC article noted. No wonder, US Global Jets ETF JETS lost about 15.5% over the past month (as of March 20, 2026).

Fuel Costs to Hurt Profits

Due to the Iran war and the related Middle East crisis, oil prices have surged lately. United States Brent Oil Fund LP BNO has gained 56.2% over the past month (as of March 20, 2026) and has jumped about 87.3% so far this year.

The airline sector performs better in a falling crude scenario, as energy costs form a major portion of the overall cost structure of the sector. Jet fuel prices have nearly doubled since late February, causing a cost shock for airlines and disrupting global flight operations due to rerouting and airspace restrictions.

At such elevated levels, United’s annual fuel bill could rise by about $11 billion – more than double the profit from its “best year ever,” Kirby noted, as mentioned in the CNBC article.

Strategy: Profitability Over Volume

United now plans to cut about three percentage points of off-peak flying in the second and third quarters, focusing on routes with weaker demand. Kirby emphasized that United would rather leave some demand unmet than operate flights that lose money in a high fuel-cost environment, as mentioned in the same article.

U.S. airlines are particularly susceptible to fuel spikes as most do not hedge fuel costs, unlike many European and Asian peers. Instead, they rely on fare hikes and capacity adjustments to manage rising expenses, the article went on to highlight.

Delta Air Lines, for instance, recently raised its revenue outlook and signaled flexibility to trim capacity if fuel prices remain elevated.

How to Play With ETFs?

Investors need to tread cautiously against this backdrop. While airlines’ intentions to maintain profitability through fare hikes and capacity trimming are positive for the fund US Global Jets ETF JETS, any spike in Iran crisis is a negative for the space. The fund was down 1.2% last week. Meanwhile, MAX Airlines -3X Inverse Leveraged ETNs JETD jumped about 55% over the past month (as of March 20, 2026). This ETF JETD can be exercised in the worst-case scenario to earn some quick gains.

Any Caveat?

Inverse funds run the risk of huge losses compared to traditional funds in fluctuating or seesawing markets. Further, their performance could vary significantly from the actual performance of their underlying index over a longer period compared to shorter periods (such as weeks or months).

Investors should note that these products are suitable only for short-term traders as these are rebalanced on a daily basis. Further, liquidity can be a big problem as it can make the products more expensive than they appear.

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United Airlines Holdings Inc (UAL): Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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