Please stay tuned for important disclosure information at the conclusion of this episode.

Welcome to Investing Insights. I'm your host, Ivana Hampton.

Macro-economic conditions are squeezing U.S. airlines and travelers just in time for the summer travel season.

Higher fuel costs due to the conflict in the Middle East are pushing up ticket prices.

The latest consumer price index report showed fares rose about 3% in April.

Meanwhile, choices for cheap seats decreased when Spirit Airlines went out of business in May. The ultra-low-cost

carrier blames soaring energy prices. What does this uptick and energy inflation mean for airline

profits and travelers' wallets? Nick Owens is an equity analyst for Morningstar and covers the North

American Airlines. Thanks for being here, Nick.

Thanks for having me, Atlanta.

Can you talk about how the spike in energy prices is affecting the airline industry overall?

Yes.

Generally, a spike like that, unanticipated increase in fuel costs.

In the short term, it's bad for the airlines because they have to fill the planes

at more expensive fuel than they anticipated.

But even weeks after, they adjust their ticket prices usually to accommodate the fuel price.

And the only concern is that if the fuel price stays high for a really long time, then higher ticket prices might keep people away.

How have carriers change their profit outlooks for 2026? And how does it line up with your forecast?

They pretty much to an airline on the Q1 earnings calls lowered or kind of backed away from their initial 2026

profitability. They admitted that Q1 really March, it affected them badly. And nobody knows exactly

how long fuel will stay this high. I had, I also lowered then some of my, my forecasts, and I had already thought that

there might be less growth in 2026 than 2025, in a way for separate reasons. But this is kind of

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