Iran conflict raises financial pressure on European airlines amid higher fuel costs

Rising oil prices and continued instability linked to the conflict involving Iran are increasing financial pressure on parts of Europe’s airline industry, prompting concerns over potential mergers, restructurings, and bankruptcies, according to industry executives, investors, and analysts.

British low-cost carrier easyJet is reportedly nearing a US-led takeover that could take the airline private at a valuation significantly below its pre-pandemic peak. Meanwhile, airBaltic is seeking short-term financing to avoid a potential default, and Norway’s Norse Atlantic Airways is conducting a strategic review of its business.

Although many airlines strengthened their finances following the COVID-19 pandemic, higher fuel prices have weighed on airline share prices and highlighted the financial vulnerability of some carriers, leading them to consider restructuring, acquisitions, or bankruptcy protection.

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Last month, the global aviation industry nearly halved its profit forecast for 2026, citing the impact of the conflict in the Gulf, including higher fuel costs, disruption to key flight routes, and continued pressure on airline profitability.

Bankers, investors, and analysts said the ongoing conflict involving Iran, which has contributed to sharp increases in fuel prices this year, has intensified cost pressures that have persisted since the pandemic.

“It’s as if the cycle ended before it even began,” aviation analyst Rob Morris said, referring to the industry’s expected recovery.

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