US-Israeli war on Iran pushes European airlines to bankruptcy: Report

Rising fuel costs driven by the US aggression against Iran have intensified financial pressure on several smaller European airlines, pushing some to the brink of collapse and bankruptcy, Reuters reports. 

Disruptions in the Strait of Hormuz stemming from the US-Israeli terrorist war on Iran have driven a sharp increase in energy prices, while the resulting surge in fuel and transportation costs has deepened economic pressures in the United States, raising concerns that higher energy prices could continue to erode household purchasing power and consumer spending in the months ahead.

As renewed tensions in the Persian Gulf have sent oil prices climbing once again, airline investors and industry executives say there are growing signs that Europe's financially weaker carriers may not survive the latest shock.

Among them is British low-cost carrier easyJet, which is reportedly on the verge of being acquired by a US company in a deal that would take the 30-year-old airline private at a valuation significantly below its previous market worth.

Latvia's airBaltic is also seeking short-term financing to meet its debt obligations, while Norwegian carrier Norse Atlantic is conducting a strategic review.

Reuters noted that after the severe financial strain caused by the COVID-19 pandemic, airlines had only recently begun stabilizing their balance sheets before soaring fuel prices once again eroded share values and exposed their fragile financial positions.

As a result, several carriers are now considering restructuring, asset sales, or even bankruptcy protection.

"We are pitching, I think, four or five very large airlines on restructuring situations just at the moment across Europe," Barema Bocoum, head of EMEA at financial advisory firm Interpath, said.

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According to the report, the global airline industry last month nearly halved its 2026 profit forecast due to the West Asia war and rising fuel prices.

Bankers, investors, and analysts also said the war against Iran, which triggered a sharp surge in fuel prices this year, has compounded the financial pressures that have persisted since the COVID-19 pandemic.

The increasingly difficult operating environment has forced airlines to scale back expansion plans. Aircraft manufacturer Airbus recently lowered its 20-year forecast for passenger aircraft demand, citing the war and ongoing trade tensions.

"Airlines are mostly maintaining very modest growth in US, Europe and Southeast Asia," said aviation adviser and former sector banker Bertrand Grabowski.

Higher jet fuel costs, which account for more than one-third of airlines' operating expenses, have also raised concerns over the sector's financial health this year.

"The smaller (airlines) are the ones probably in danger," said London-based aviation analyst James Halstead, adding that losing traffic in the key summer season could prove fatal for some carriers in an industry that relies heavily on available cash.

"Unfortunately, I think there will be some carriers that will find this high fuel price very difficult to cope with," Walsh said.

Willie Walsh, director general of the International Air Transport Association (IATA), also said in June that some airlines would likely go out of business or be acquired by larger carriers, particularly if fuel prices remain elevated.

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