Raymond James lowered financial estimates for most airlines it covers after revising jet fuel price forecasts upward, citing a 39% quarter-to-date surge in Gulf Coast jet fuel prices through August 19. The firm raised its jet fuel price outlook for the second half of 2026 by roughly 18%, for 2027 by 14%, and for 2028 by 7%, attributing the increases primarily to higher refining margins rather than crude oil prices.
The revision follows a 26% rise in Brent crude and a 21% increase in WTI crude over the same period. For non-U.S. carriers, the impact of higher fuel costs is partially offset by a weaker U.S. dollar against local currencies. Analyst Savanthi Syth noted that U.S. TSA passenger throughput remains about 2.6% lower year-over-year quarter-to-date, despite a 1.1% decline in scheduled seats, as airlines prioritize yield optimization and contend with higher cancellations due to adverse Northeast weather.
U.S. domestic capacity growth for the fourth quarter was raised to 2.3% from 1.5% earlier in August, driven by stronger-than-expected expansion at American Airlines and United Airlines. In Europe, intra-regional seat capacity rose about 5% year-over-year over the summer, contributing to weaker-than-expected fares as airlines struggled to balance elevated capacity with demand. Analysts expect a supply inflection in winter as fuel-hedge rolloffs and earnings pressure prompt capacity discipline among major carriers including Ryanair, easyJet, AF-KLM, IAG, and Lufthansa.
Latin American demand remains robust, with Copa reporting better-than-average performance on Brazil-North America routes. Air Canada indicated constructive demand into the second half of the year, with corporate and premium travel trends improving beyond the typical July-August leisure peak. Despite the broader downgrades, Raymond James upgraded Allegiant Travel to Strong Buy from Outperform, citing a pullback in the stock as an opportunity to highlight the company's margin recovery levers, flexible capacity model, and expanded scale following the acquisition of Sun Country. Allegiant's shares rose more than 2% in premarket trading following the upgrade.
