If Oil Hits $100, Delta and United Are in Trouble

Core Viewpoint - If WTI crude oil prices reach $100 per barrel, Delta Air Lines and United Airlines will face significant challenges, leading to a potential drop in their stock prices by 20% or more from current levels, as their earnings guidance is based on low fuel costs that would no longer be sustainable at that price point [1]. Group 1: Earnings Guidance and Fuel Costs - Delta's FY2026 EPS guidance is set at $6.50 to $7.50, while United's is at $12.00 to $14.00, both based on favorable fuel costs from 2025 [1]. - In 2025, Delta experienced a 7% year-over-year decrease in fuel expenses, with prices as low as $2.25 per gallon, while United's Q2 2025 fuel cost was $2.34 per gallon, down over 15% year-over-year [1]. - Both airlines have identified fuel price volatility as a significant risk, and a rise to $100 oil would drastically alter their earnings outlook [1]. Group 2: Current Stock Performance - Delta's stock has fallen nearly 15% year-to-date, from $69.22 to $59.01, while United's stock is down over 17%, from $111.82 to $92.07 [1]. - The current stock prices reflect market concerns about macroeconomic uncertainties, and rising oil prices would further validate these bearish sentiments [1]. Group 3: Oil Price Trends - As of March 2, 2026, WTI crude oil is priced at $71.13 per barrel, having increased by 10.3% from $64.50 in early February [1]. - The oil price would need to rise an additional $28.87 to reach $100, which is plausible given recent trends and potential geopolitical shocks or supply disruptions [1]. - Delta's ownership of the Monroe Energy refinery provides some hedge against rising fuel costs, but analysts' bullish ratings on both airlines depend on a stable fuel environment [1].