So, you know how airlines are basically flying gas stations with wings? That analogy got a little too real for investors on Thursday. Shares of United Airlines Holdings Inc (UAL) were taking a nosedive, underperforming a generally weak market. The culprit? A sudden, sharp spike in oil prices that has everyone recalculating airline fuel bills and profit margins.
Here's the fuel gauge reading: U.S. crude oil jumped 6.5% on Wednesday to about $79.70 a barrel, hitting its highest level since January 2025. For the week, that puts oil up a staggering 18%, marking its strongest rally since early 2022. When jet fuel—typically an airline's biggest single cost—gets that much more expensive that fast, Wall Street tends to mark down the stocks on the assumption that any attempt to raise fares will lag painfully behind.
Geopolitics Fuels the Fire
What lit the match under oil prices? The intensifying conflict involving the U.S., Israel, and Iran. The resulting disruption risk around the Persian Gulf, a critical shipping chokepoint, sent shockwaves through the market. Reports of hundreds of vessels anchored while the U.S. Navy escorted tankers through the Strait of Hormuz underscored the fear: a tighter near-term supply of oil and, consequently, higher prices for refined products like jet fuel.
Beyond just the cost of filling up the tanks, the conflict is tangibly complicating air travel. Qatar's airspace remained closed, and Qatar Airways said departures from Doha were suspended, though it launched relief flights from other cities for stranded passengers.
The Entire Sector Gets Hit
United wasn't flying solo into this turbulence. The sell-off hit airlines across the board. The U.S. Global Jets ETF (JETS), a basket of airline stocks, sank more than 5% in its worst session since April 2025. United itself dropped about 6% on Wednesday on those margin concerns.
Making matters worse, broader macro headwinds were blowing in the wrong direction. The inflation risk rising alongside energy prices pushed Treasury yields higher, with the 10-year yield climbing to 4.143%. Rate traders, getting nervous, dialed back their expectations for Federal Reserve interest rate cuts to just one in 2026. That's a particularly tough backdrop for economically sensitive companies like airlines, which thrive when consumers and businesses feel confident spending on travel.
A Technical Downturn for United
Let's look at the chart. United's stock had been on a pretty impressive run over the past year, climbing from a low around $56.15 to a high near $117.53. For most of that uptrend, the price held comfortably above its key 50-day and 200-day moving averages—a sign of healthy momentum.
Recently, though, the engine has sputtered. The stock has pulled back below the psychologically important $100 level and, more tellingly, has slipped below its 20-, 50-, and 200-day moving averages. That's a clear technical signal that the bullish momentum has weakened, at least for now.
What Are the Analysts Saying?
Despite the rough landing, Wall Street's airline spotters are largely keeping their binoculars trained on the buy side. A rundown of recent analyst moves shows all maintaining a Buy rating on United, though they've been tweaking their price targets:
- March 5 (Rothschild & Co): Lowered the target price from $125 to $110.
- Jan. 22 (TD Cowen): Raised the target price from $138 to $140.
- Jan. 22 (UBS): Raised the target price from $145 to $147.
- Jan. 22 (Argus Research): Lowered the target price from $140 to $135.
- Jan. 13 (Goldman Sachs): Raised the target price from $115 to $129.
The message seems to be: the long-term flight plan is still valid, but we're hitting some unexpected headwinds that might delay the arrival.
UAL Price Action: United Airlines Holdings shares were down 5.27% at $95.19 at the time of publication on Thursday, according to market data.
