U.S. airlines have long abandoned the practice of hedging their fuel costs. Following a surge in oil prices after U.S. and Israeli strikes on Iran, airline profit margins could be significantly eroded if the conflict persists and keeps oil prices elevated for an extended period. Jet fuel prices have climbed 15% over the past week, presenting another challenge to an industry already grappling with the fallout from escalating tensions, which has led to the cancellation of over 20,000 flights and left thousands of passengers stranded. Fuel represents the second-largest expense for airlines after labor, typically accounting for 20% to 25% of operating costs. Over the past two decades, U.S. carriers have largely discontinued hedging this expense. Southwest Airlines, once an active hedger, ended the practice in 2025, citing high costs and unreliability. In contrast, European and Asian carriers such as Air France-KLM and Cathay Pacific maintain active hedging programs. Hedging, which uses derivative contracts, can shield airlines from sudden spikes in fuel costs. However, it can also backfire when prices fall, locking carriers into swap rates above market levels. U.S. airlines have previously encountered difficulties with certain types of hedging contracts. Without hedging, airlines are exposed to the risk of sustained increases in jet fuel prices, which currently average $2.83 per gallon according to Oil Price Information Service data. Spot fuel prices on the U.S. Gulf Coast surged to $4.12 per gallon on Thursday, the highest level since June 2022, as reported by S&P Global Platts. Delta Air Lines stated in its annual filing that a one-cent increase per gallon in jet fuel costs would raise its annual fuel expenditure by approximately $40 million. Regulatory filings indicate that American Airlines' fuel costs would increase by about $50 million, while Southwest Airlines would see a $22 million rise. A spokesperson for American Airlines noted that the carrier's fuel consumption in 2025 is roughly double that of Southwest, reflecting differences in fleet size and overall flight operations. TD Cowen estimated on Monday that at current jet fuel prices, United Airlines' earnings per share for the March quarter could range between $0.05 and $0.22, significantly below the company's January forecast of adjusted EPS between $1.00 and $1.50. United declined to comment, though its CEO Scott Kirby acknowledged that rising fuel prices would have a "material" impact on quarterly results. According to Reuters calculations, if jet fuel prices remain at these elevated levels throughout the year, the combined fuel costs for these four major U.S. airlines could increase by $5.8 billion, reversing a trend of declining fuel expenses in recent years.