Morgan Stanley cuts U.S. airline estimates across the board on jet fuel costs

Morgan Stanley has downgraded its estimates for the entire U.S. airline sector due to the impact of surging jet fuel prices, exacerbated by the Middle East conflict. Despite these challenges, the brokerage noted the resilience of airlines in early 2026, driven by strong travel demand and booking trends, which could lead to a “new era of earnings resilience” if momentum continues. However, the analysts predict challenges through 2026, with potential recovery delays to 2027 if demand weakens or fuel prices remain high.

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