US and European airline shares declined sharply on Wednesday as crude oil prices exceeded $100 per barrel, intensifying cost pressures on carriers already navigating high fuel expenses. Brent crude futures climbed above $100 amid geopolitical tensions and supply constraints, reversing a downward trend that benefited airlines throughout 2024.
In 2024, US airlines reported aggregate after-tax net profits of $6.7 billion and pre-tax operating profits of $13.5 billion, down slightly from 2023 levels despite record operating revenue of $247.2 billion. Fuel costs, which fell to 16.7% of total fourth-quarter operating expenses from 22.1% a year earlier, supported this performance. American Airlines generated record free cash flow of $2.2 billion, achieving a $15 billion debt reduction goal ahead of schedule, with fourth-quarter revenue hitting $13.7 billion.
The S&P 500 Super Composite Airlines Index surged 60% in 2024, its strongest year since 2014, outpacing the S&P 500’s 27% gain amid robust travel demand. Delta and United held 21% domestic market shares each. Globally, IATA projected $30.5 billion in net profits for airlines, with North American carriers expected at $14.8 billion.
Oil’s rally erodes these gains, as fuel remains airlines’ second-largest expense after labor, which rose to 37.7% of costs in late 2024. Carriers face squeezed margins unless offset by fare hikes or capacity cuts, with investors monitoring hedging strategies and demand resilience.