Airlines at risk of losing profit

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March 13, 2026 | 12:00am

As war drives jet fuel prices upward

MANILA, Philippines — The country’s leading carriers Cebu Pacific and Philippine Airlines (PAL) may flip to a net loss if jet fuel prices stay above $76 per barrel and the war in the Middle East lingers for more than two months, an aviation analyst said.

George Dimitroff, head of valuations at Cirium, said airlines stop making profit when jet fuel prices hit $76 a barrel and incur losses when rates exceed that.

Jet fuel prices have spiked by 58 percent to $157.41 per barrel as of March 6, as supply tightens because of escalating tensions in the Middle East, the world’s largest oil producer.

“Cirium analysis and modeling shows the global airline industry stops making profit somewhere between $72 and $76 per barrel [on a] sustained, longer term, depending on assumptions. Above that fuel price, the industry starts to make losses,” Dimitroff said.

Both Cebu Pacific and PAL cruised to profitability in 2025, propelled by the resilience of Philippine air travel. In the nine months to September last year, Cebu Pacific’s net income tripled to P9.46 billion, while PAL booked P9.03 billion in earnings.

However, Dimitroff said even that consistent demand may weaken, as elevated fuel prices would consume a larger share in daily expenses, forcing consumers to minimize spending on non-essential items.

He said the aviation industry had been focused on building up fleet to meet booking demand in the pandemic aftermath, prompting aircraft makers like Airbus and Boeing to speed up production.

Dimitroff warned that 2026 may be the first year in the post-pandemic period that airlines have to be cautious about demand and reconsider fleet expansion.

“For the past few years, we have considered many scenarios that are focused on aircraft supply increasing to meet demand. For the first time since the COVID-19 pandemic, we again must start considering the risk to demand, as this could be especially critical as manufacturers are making their biggest ramp-up in production over the next three years or so,” Dimitroff said.

The biggest losers in the crisis, Dimitroff said, are airlines running with older-generation aircraft, particularly for long-range flights. These units need to burn more fuel to complete their trips, and carriers will feel the pain in their operating expenses.

Dimitroff also flagged the airspace closures in the Middle East as another factor that may pull down demand, underscoring the region’s important role as a transit hub.

Based on data from Cirium, one in 10 passengers from the US travel to Asia-Pacific destinations like the Philippines on one-stop flights via the Middle East.