Investing.com -- UBS has lowered estimates and price targets across its U.S. airline coverage, warning of “significant uncertainty” surrounding fuel costs and the sector’s 2026 outlook.

Analyst Atul Maheswari wrote in a note Monday that several carriers are likely to preannounce results this week, with most pointing first-quarter performance “towards the mid-point of the guide.”

According to UBS, early-March fuel spikes will affect only about 15 days of the quarter because airlines typically hold two weeks of fuel inventory, helping cushion the impact on earnings.

Maheswari added that “airlines have been talking up demand,” suggesting potential upside to first-quarter revenue per available seat mile.

However, the firm expects carriers to suspend full-year 2026 guidance due to fuel volatility.

Maheswari wrote that the current share-price declines resemble the 2022 downturn, when jet fuel last surged at a comparable pace.

Since late February, Alaska Airlines and smaller airlines are down about 30%, while United Airlines, American Airlines, and Southwest Airlines are down in the mid-20% range. Delta Air Lines has fallen 17%.

Maheswari cautioned that investors must remain mindful of “the tail risk of this conflict persisting for longer than expected driving jet fuel even higher.”

A prolonged conflict, he said, could spark inflation and prompt consumers to pull back on travel, a scenario not fully reflected in current valuations.

In updated estimates, UBS now assumes roughly $3-per-gallon jet fuel in the second half of 2026 and fuel pass-through rates of 30% to 50%.

The firm cut its price target for Delta to $82 from $87, United to $134 from $147, American to $15 from $21, Southwest to $59 from $73, and Alaska to $60 from $77.