Air France-KLM has slashed its 2024 capacity growth forecast to 2%-4%, down from 3%-5%, citing surging jet fuel prices linked to the Iran war. The French-Dutch carrier warned that fuel costs could balloon to $9.3 billion in 2026—$2.4 billion more than 2025—as tensions in the Strait of Hormuz disrupt oil supplies.

Jet-fuel prices in Europe have more than doubled since the U.S.-Israel strikes against Iran, with the Strait of Hormuz closure crippling Gulf oil exports. Airlines face mounting pressure to absorb these costs, threatening profit margins. The group’s first-quarter revenue hit 7.48 billion euros ($8.73 billion), up 4.4% year-on-year, but executives called the outlook “volatile.”

European airlines are rallying against fuel price hikes, warning they could erode market share and competitiveness. Air France-KLM’s revised forecast underscores the immediate financial pressures airlines face, with fuel bills consuming a growing slice of operational budgets.

Air France-KLM’s revised forecast underscores the immediate financial pressures airlines face, as geopolitical instability and supply chain disruptions reshape the aviation sector’s outlook.