Published by Global Banking & Finance Review®
Posted on March 5, 2026
5 min readLast updated: April 2, 2026
Add as preferred source on GoogleAirline shares bounced back Thursday as limited Middle East flights resumed via safe corridors. Markets steadied after earlier steep losses from U.S.–Israeli strikes and soaring jet fuel costs, though full recovery hinges on lasting geopolitical calm.
By Rajesh Kumar Singh, Joanna Plucinska and Federico Maccioni
CHICAGO/LONDON/DUBAI, March 5 (Reuters) - Shares of U.S. and European airlines fell on Thursday after oil prices spiked and the U.S.-Israeli conflict with Iran constrained much of the Middle East's airspace, prompting governments to scramble to bring stranded citizens home.
With most of the region's airspace still closed over missile-risk concerns, authorities have been arranging charter flights and securing seats on limited commercial services to evacuate tens of thousands of people.
Etihad Airways, one of the United Arab Emirates' two flag carriers, said it would resume a limited commercial schedule from March 6 to 19, operating flights to and from Abu Dhabi and destinations including Cairo, Delhi, London, Frankfurt, New York, Paris, Moscow, Toronto and Zurich.
Saudi budget carrier flynas will also run a limited number of exceptional flights between Saudi Arabia and Dubai starting on Friday, Saudi state television reported on Thursday.
Even so, traffic remains heavily disrupted. Flightradar24 data show movements at Dubai International Airport — the world's busiest travel hub — have risen over the past three days but are still only about 25% of normal levels.
More than 19,000 flights have been cancelled across seven major Middle East airports since the military offensive against Iran began on February 28, the data showed. With the conflict showing little sign of easing, wider aviation and air-cargo disruption looked set to linger.
"The past few days have been unprecedented," Dubai Airports CEO Paul Griffiths said on Thursday on LinkedIn in his first public remarks since the airstrikes began.
Azerbaijan, a key flight corridor between Asia and Europe, closed part of its airspace near Iran on Thursday after Iranian drones entered its airspace and one struck a terminal building at Nakhchivan International Airport.
The restriction applied to the southern border area, but airspace crucial for Asia-Europe flights remained open.
Airline stocks have been hammered since the initial strikes last weekend, with investors worried route closures could be prolonged and fuel costs could stay high. Jet fuel prices have soared globally, hitting an all-time high in Singapore, S&P Global Platts said on Thursday.
U.S. airlines have limited exposure to Middle East routes, and the conflict has not forced the kind of network shutdowns affecting Gulf-based carriers. But higher fuel prices pose a risk to balance sheets.
Fuel is typically the second-largest expense for U.S. airlines after labor, and many of them no longer hedge, leaving them more vulnerable to price spikes.
Without hedges, airlines must raise fares to offset higher costs. But tickets are often sold weeks or months ahead, so carriers must absorb sudden spikes in the near term. Whether they can raise prices later depends on demand, and airlines have flagged strain among more price-sensitive travelers.
Also hitting airlines, the price of jet fuel can jump faster than crude when refineries go offline, shipments are disrupted, insurance costs rise or regional supplies tighten.
"We expect March to hit (U.S.) airlines' profitability due to the unanticipated jump in fuel prices," said Nicolas Owens, an equity analyst at Morningstar.
Shares of Southwest Airlines, American Airlines, Delta Air Lines, United Airlines and Alaska Air Group closed down between 4% and 9%. The broader NYSE Arca Airline index fell about 6%.
In Europe, Air France KLM closed lower, while Lufthansa, British Airways-owned IAG and budget carrier Ryanair fell.
Wizz Air, which flagged a $58 million profit hit from the conflict, fell 9%. Chief Executive Jozsef Varadi told Reuters the impact should be limited to the financial year ending this month and said the carrier was shifting capacity toward Europe.
Fitch Ratings said most European and Middle Eastern carriers maintain relatively high fuel‑hedging levels, with coverage for the next three months ranging from about 50% to more than 80%.
Emirates and Etihad are now operating limited services from Dubai and Abu Dhabi through safe air corridors. An Emirates spokesperson said more than 100 flights should depart from Dubai with passengers and cargo on Thursday and Friday.
Qatar Airways said it would run limited relief flights from Thursday for stranded passengers, departing from Muscat in Oman to six European destinations including London, Berlin and Rome as well as from Riyadh to Frankfurt.
Governments from the U.S. to Canada and across Europe have arranged charter flights and helped secure seats on commercial services to repatriate citizens. More than 17,500 Americans have returned to the U.S. since February 28.
(Reporting by Julie Zhu and Joyce Zhou in Hong Kong, Federico Maccioni in Dubai, Joanna Plucinska in London and Rajesh Kumar Singh in Chicago; Additional reporting by Li Gu in Shanghai and Edwin Waita; Writing by Anne Marie Roantree, Adam Jourdan and Rajesh Kumar Singh; Editing by Mark Potter, David Gregorio and Jamie Freed)
Airline shares dropped due to the closure of Middle East airspace following U.S.-Israeli strikes on Iran, which raised concerns about flight safety and travel disruption.
Emirates and Etihad Airways have resumed limited flights from Dubai and Abu Dhabi, while Qatar Airways flights from Doha remain halted.
Governments are arranging commercial and charter flights to repatriate stranded citizens, including Australians, Americans, and Canadians.
Many Asian airline shares rebounded after initial drops, but their performance depends on developments in the Middle East conflict.
Some travelers are leaving the Middle East via Saudi Arabia or Oman, where airspace remains open for flights.
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