Jet fuel crisis forces airlines cuts as WH Smith suspends dividend

Thursday 23 April 2026 - 16:20

By: Dakir Madiha

Jet fuel crisis forces airlines cuts as WH Smith suspends dividend

The global aviation sector is facing a severe disruption as jet fuel prices surge following the closure of the Strait of Hormuz. The escalation stems from military strikes by the United States and Israel against Iran on February 28, which effectively halted a key energy transit route. Fuel costs have more than doubled within weeks, forcing airlines worldwide to cancel flights, raise fares, and scale back operations just ahead of the peak summer travel season.

Major carriers have moved quickly to contain rising costs. Lufthansa announced plans to cut 20,000 short-haul flights between May and October, a reduction expected to save around 40,000 metric tonnes of fuel. United Airlines said it would cancel about 5 percent of scheduled flights, warning that sustained fuel prices at current levels could add up to 11 billion dollars annually to expenses. Across the industry, airlines are trimming capacity, grounding aircraft, and introducing new fuel surcharges.

The impact extends across regions. SAS canceled 1,000 flights in April. KLM removed 80 return services at Schiphol Airport. Other major carriers, including Air Canada, Delta Air Lines, Cathay Pacific, American Airlines, Southwest Airlines, and Qantas, have also reduced flight schedules and increased fees. Jet fuel prices have climbed from around 85 to 90 dollars per barrel before the conflict to between 150 and 200 dollars, intensifying pressure across the sector.

Europe faces an additional risk of physical fuel shortages. International Energy Agency warned that the region may have only about six weeks of jet fuel remaining under current conditions. European refineries are operating at full capacity and cannot replace lost imports from the Middle East, which typically account for roughly 75 percent of supply. ACI Europe cautioned that a systemic shortage could emerge if shipping routes remain closed, while the European Commission is preparing contingency measures, including potential fuel rationing.

The crisis is spreading beyond airlines into related industries. TUI lowered its profit outlook for the fiscal year ending September 2026, citing weaker demand. WH Smith suspended its dividend and issued a profit warning as reduced airport traffic hit retail sales, sending its shares down more than 15 percent. Meanwhile, Qantas delayed a planned share buyback and raised its fuel cost forecast to as much as 3.3 billion Australian dollars. With shortages expected to worsen, the aviation industry now faces a combination of soaring costs and shrinking capacity, raising concerns over sustained disruption in global air travel.