Rothschild Warns American Airlines at Greatest Risk from Higher Jet Fuel Prices

Analyst cites U.S.-Iran conflict as driving fuel cost inflation that could hurt airline's earnings outlook.

Published on Mar. 5, 2026

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Rothschild & Co Redburn has downgraded American Airlines to neutral from buy, warning that the airline is the most exposed to rising fuel costs as the U.S.-Iran conflict continues. Analyst James Goodall lowered his price target for AAL to $12.5 per share, citing the airline's high sensitivity to fuel prices and pressures facing its network this year, including overcapacity in Chicago and some Middle East exposure.

Why it matters

The U.S.-Iran conflict has introduced a new obstacle for airline carriers, as it could drive jet fuel prices higher and hurt the sector's earnings outlook. This is particularly concerning for American Airlines, which has the greatest sensitivity to fuel prices among major U.S. airlines.

The details

Goodall wrote that the underlying backdrop for U.S. airlines was positive heading into 2026, with demand trends looking like they were improving. However, the recent Middle East conflict has introduced an obstacle, as it could drive jet fuel prices higher. Goodall noted that every 10-cent move per gallon in jet fuel prices equates to almost 25% in American Airlines' earnings per share. He also cited pressures facing the airline's network this year, including overcapacity in Chicago and some Middle East exposure.

  • The U.S.-Iran conflict has been ongoing since 2026.

The players

Rothschild & Co Redburn

An investment bank that has downgraded American Airlines to neutral from buy.

James Goodall

An analyst at Rothschild & Co Redburn who lowered the price target for American Airlines to $12.5 per share.

American Airlines

A major U.S. airline carrier that is seen as the most exposed to rising jet fuel prices due to the U.S.-Iran conflict.

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What they’re saying

“Domestic capacity growth is now accelerating through this year, and the Iran conflict will add disruptive pressures and material fuel cost inflation. Indeed, higher fuel prices result in a material cut to our forecasts and an expectation of substantial downgrades to consensus this year.”

— James Goodall, Analyst (CNBC)

“This along with pressures facing its network this year — overcapacity in Chicago and some Middle East exposure — means we see the most downside risk to estimates.”

— James Goodall, Analyst (CNBC)

What’s next

Investors will be closely watching for any further developments in the U.S.-Iran conflict and its impact on jet fuel prices, which could lead to additional downgrades or earnings revisions for American Airlines and other airlines.

The takeaway

The U.S.-Iran conflict has introduced a new risk factor for the airline industry, with American Airlines seen as the most vulnerable due to its high sensitivity to fuel prices and other network pressures. This highlights the importance of airlines managing their exposure to volatile fuel costs, especially during times of geopolitical uncertainty.